is the ask price price alwaysa higher than the bid price? If so, what is the reason behind it?
if you are a Seller then you want to sell at a higher price where as buyer wants to buy at lower price.
Analogy : shopping in the bazaar
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Arpit, it’s simple - think of it this way: You go out to buy an apple and the person selling asks 10 rupees for 1 apple which is “ask price” and you can place your bid price and obviously you will bid for a price less than 10 rupees, right? This is the “bid price”.
You won’t bid for 15 rupees an apple while the seller is asking 10 rupees only!
An exchange too works in a similar way.
I suggest you to read and understand and ask questions before you start your trading journey as your hard earned money is at stake. All the best.
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Thanks! this was helpful. But i read it somewhere that in cases of a crossed market, the ask price can be lower than the bid price. What is the reason behind that?