Ask Size: Trading Basics
Financial market trading has many terminologies and ideas that might be confusing for novices. Example: “Ask Size.” We shall define Ask Size and discuss its application in trading in this post.
Knowing Ask Size
“Ask Size” in trading refers to the number of shares or contracts available for purchase at a certain price. It shows how many shares sellers are ready to sell at the Ask price.
The bid-ask spread—the gap between a buyer’s highest offer and a seller’s lowest ask—includes Ask Size.
Say a stock’s Ask price is $50 and Ask Size is 100. This indicates 100 shares are offered for $50 Ask.
Ask Size Matters for Traders
Traders use ask size to assess security liquidity and supply. A deeper market with more sellers prepared to sell at a certain price level increases the chance of satisfying a purchase order fast.
However, a smaller Ask Size indicates reduced liquidity and may hinder order execution or make it harder to locate a counterparty.
To make trading choices, traders study Ask Size and other market indicators. Buyers like large ask sizes because they reflect a large share supply.
Please note that Ask Size alone cannot predict a stock’s direction. Before trading, market emotion, news, and business fundamentals must be considered.
How to Read Trading Platform Ask Size
Most trading systems show the Ask Size as a number next to the Ask Price. Find it in Level 2 or Order Book on the platform.
A trading platform may show an Ask Price of $50 and an Ask Size of 100, suggesting 100 shares available for purchase at that price.
Conclusion
Beginning traders must understand Ask Size to understand a security’s supply and liquidity. Using Ask Size and other market indicators, traders may make better selections.
Remember, trading is risky, so educate yourself and get expert advice before investing.
References and sources:
1. Investopedia—https://www.investopedia.com/terms/a/ask-size.asp
2. NASDAQ Glossary—https://www.nasdaq.com/glossary/a/ask-size