Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Ask Size

What it is:

Ask size is the number of shares a seller is selling at a quoted ask price. The ask size is the opposite of the bid size, which is the number of shares a buyer is willing to buy at the quoted bid price.

How it works (Example):

You are watching Company XYZ stock. If the ask is $50 x 1,000, this means a seller is willing to sell 1,000 shares of Company XYZ for $50 per share.

Note the number of shares wanted (the bid size) and the number of shares offered for sale (the ask size) may be different. This means that an investor may only be able to purchase 5,000 of a desired 10,000 Company XYZ shares at $50 if there are only 5,000 shares for sale at that price.

Why it Matters:

Ask size is more than just a number; it is an indication of the condition of the market. For instance, order imbalances may occur when there are more buy or sell orders for a specific security than can be matched. This can occur when earnings surprises, mergers, or other news reaches the market. In these cases, market makers or specialists may have to buy or sell shares from their inventories in order to clear out the excess orders, which helps maintain liquidity in the market. However, when ask sizes and bid sizes are significantly mismatched, the imbalance can force the exchange to suspend trading. This is why many traders and analysts study patterns in bid-ask sizes and spreads to understand the implications for certain securities or the market.