Bid Size Defined and Explained With Example

In the world of stock trading, numbers speak louder than words a— and bid size is one of the most telling figures. Whether you’re placing your first trade or managing a large investment portfolio, understanding bid size can help you make informed and well-timed decisions. It gives you insight into how much demand exists for a particular stock and can influence everything from trade execution to price movement and liquidity.

Bid size refers to the total number of shares that investors are willing to buy at a specific bid price. It represents the demand side of a trade — in other words, how many shares buyers are interested in purchasing at a particular price point. For instance, if a stock has a bid price of ₹500 and a bid size of 2,000, it means buyers are collectively ready to buy 2,000 shares at ₹500 each.

This number is prominently displayed on trading terminals and order books and updates in real-time as new buy orders come in or are fulfilled.

In the stock market, bid size reveals the buying interest in a security. It helps traders and investors understand:

• Market sentiment: A high bid size often signals strong buyer confidence or a bullish outlook.
  

• Liquidity: Larger bid sizes can suggest that it’s easier to sell your holdings without significantly impacting the stock’s price.
  

• Price stability: When a stock has a consistently high bid size at a certain price level, it may act as a price support zone.
  

For example, if a stock’s bid size suddenly drops, it may indicate waning demand — possibly due to negative news or market trends.

Bid size and ask size are two sides of the same coin in any market transaction:

• Bid Size: Number of shares buyers want to purchase at a specific price.
  

• Ask Size: Number of shares sellers want to sell at a specific price.

Together, they form the foundation of the bid-ask spread, which is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller will accept (ask). This spread reflects the stock’s liquidity and market efficiency. A narrow spread usually indicates high liquidity and stable pricing, while a wide spread suggests low trading volume or high volatility.

In stock exchanges and online trading platforms, the order book displays real-time bid and ask sizes for a particular stock. Here’s how it works:

• Order Book View: Shows multiple levels of bid and ask prices along with corresponding sizes.
  

• Depth of Market (DOM): Traders use DOM to view how much buying or selling interest exists at various price levels.
  

• Execution Priority: Larger bid sizes at higher prices get executed first, making them more likely to fill quickly.
  

For instance, a bid price of ₹300 with a bid size of 5,000 shares will take precedence over a lower bid price of ₹295 with 10,000 shares.

Bid size operates in real-time through an electronic order matching system:

1. Buyers submit bids for a stock at their preferred price and quantity.
   

2. These bids are ranked by price (highest first) and time (first-come, first-served).
   

3. Sellers submit asks, and when a match is found — i.e., a buyer's bid meets or exceeds a seller's ask — the trade is executed.

The bid size dynamically changes as new buy orders are placed, modified, or cancelled. Larger institutions and market makers often place large bid sizes to show buying support or create liquidity.

Let’s say you’re looking at Stock ABC and see the following data on your trading platform:

• Bid Price: ₹480
  

• Bid Size: 3,000 shares
  

• Ask Price: ₹482
  

• Ask Size: 2,500 shares
  

This means buyers are willing to buy 3,000 shares at ₹480, and sellers want to sell 2,500 shares at ₹482. If a seller decides to accept the ₹480 bid, the trade gets executed, potentially for up to 3,000 shares (depending on how many the seller is offering).

The gap between ₹480 and ₹482 is the bid-ask spread, and the bid size indicates the maximum quantity buyers are ready to purchase at ₹480.

Understanding bid size provides several advantages:

• Helps gauge demand: A large bid size suggests strong interest in the stock, which may lead to price appreciation.
  

• Improves trade execution: Bid size data can indicate periods of high demand or supply for a stock..
  

• Evaluates liquidity: Higher bid sizes are typically associated with more liquid stocks, where transactions can be executed without major price impact.
  

• Assists in market analysis: When combined with price trends, volume, and news, bid size offers clues about future stock movements.
  

For short-term traders, this data is particularly useful when placing limit orders or evaluating intraday trading opportunities.

Bid size may seem like just another number on a trading screen, but it holds valuable insights into market behaviour. From indicating demand and liquidity to affecting your order execution strategy, it plays a pivotal role in modern stock trading. By understanding how bid size interacts with bid price, ask size, and overall market sentiment, investors can make informed trading decisions.

This content is for informational purposes only and the same should not be construed as investment advice. Bajaj Finserv Direct Limited shall not be liable or responsible for any investment decision that you may take based on this content.