Hit the Bid

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Hit the Bid

“Hit the bid” refers to selling a security at the prevailing bid price — the highest price a buyer is currently willing to pay. It is one side of the bid–ask dynamic: the bid is the top buy price, the ask (or offer) is the lowest sell price, and the spread is the difference between them. A seller who wants an immediate execution will often “hit the bid.” The opposite action, where a buyer accepts the ask, is called “lifting the offer.”

Key takeaways

  • Hitting the bid means selling at the market’s best bid price.
  • The bid represents the highest price buyers are willing to pay; the ask is the lowest price sellers will accept.
  • Traders use market orders to hit the bid for speed, or sell limit orders set at the bid to avoid selling below it.

How it works

  • Execution method:
  • Market order to sell: immediately fills against available bids, starting with the best bid and moving down the book if volume exceeds the top bid.
  • Limit order to sell at the current bid: posts an order that will execute only at that bid price or better.
  • Bid size and liquidity:
  • The bid price is accompanied by a bid size (quantity). If the top bid size is smaller than your sell quantity, only that portion fills at the top bid; remaining shares execute at lower bids as the order sweeps the book.
  • National Best Bid and Offer (NBBO):
  • Price displays may show the NBBO, aggregating the best bid and ask across exchanges. The top bid may come from a different exchange than the one you submit your order to.

Example

A portfolio manager wants to sell a junk bond. A broker solicits bids: one buyer offers $75 and the seller declines; another offers $74 and is declined; later a $74.50 bid is accepted. By accepting $74.50 the seller has “hit the bid.” From the buyer’s perspective, purchasing at that price is “lifting the offer.”

When traders hit the bid

  • To obtain immediate execution (liquidity preference).
  • When the bid is judged to be an acceptable price given market conditions.
  • When avoiding the uncertainty of waiting for a higher bid is more important than a potentially better price.

Conclusion

Hitting the bid is a common tactic for immediate selling at the market’s best available buy price. Understanding bid size, order types, and the NBBO helps determine whether to hit the bid or use alternate order strategies to manage price and execution risk.