The bid price represents what buyers are willing to pay for that particular security and the bid size represents how much a trader is willing to buy at that specific price. Above is an example of a Level 2 for the SPY and as you can see the bid price is currently at $224.68 with the top bid showing a size of 100.
The size for stocks is in multiples of 100 so for the size of 100 you would multiply by 100 to get 10,000 shares on the bid at $224.68. What that is saying is someone is willing to buy 10,000 shares at $224.68 and not a penny more.
You will notice that below it the size is 38 which means someone is willing to buy only 3,800 shares at the price of $224.68. You will notice that the SPY’s are very liquid with a ton of buyers and sellers at each price level with good size.
Following the bid size is important because it will tell you where big buyers are stepping in and at what price. If you know where the big orders are going in at then you know that is an important price level and something you will want to keep an eye one for a possible trade opportunity.
Sometimes you will see the bids reloading where sellers are trying to take the bid out but new bids keep coming in to hold the price there. You can also watch time and sales to see whether orders are getting filled on the bid or ask which is important because knowing if the sellers are being more aggressive and hitting the bid it could indicate prices are going lower.
Buying The Bid
Placing a buy limit order on the current bid, or “buying the bid”, does not mean you are guaranteed to get a fill, it just means that you are bidding at the highest price at that moment. There will have to be a seller willing to sell down to your bid price in order for you to get executed. So say you’re the best bid at $224.68.
That means that someone who is looking to sell shares would have to sell at that price or lower for you to get filled. Sometimes you can only get a partial fill where you will only get a portion of your order executed.
If you were trying to buy 1,000 shares but a seller came in with only 500 at that price and then bids came in higher than your price you would only be filled on the 500, leaving you with the leftover 500 shares.