What is Quoted Price?
Quoted price refers to stock, bond or other security quotes. A stock quote is an estimate of price or a price at which one party is willing to buy or sell a certain number of shares of stock from the other. A quoted price consists of a bid price and an ask price.
How Does Quoted Price Work?
For example, a quoted price for Company XYZ stock includes the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, the high price for the day and the low price for the day. Quotations are available from the exchanges online, via the media or in financial publications.
A level I quoted price is the real-time bid and ask price for a security that trades on the Nasdaq or over-the-counter markets. They do not disclose which market makers are bidding for or offering the security, whether there are limit orders on the security, or the size of potential trades at a particular price.
A level II quoted price is a set of real-time trading information for a security that trades on the Nasdaq or over-the-counter markets. It includes the real-time bid price, ask price, quote size, price of the last trade, size of the last trade, the high price for the day, the low price for the day and a ranked list of the real-time best bid and ask prices from participating market makers.
A level III quoted price includes all of the above but also allows a market maker to change its bids, offers and order sizes for securities in which it makes a market, as well as execute orders, change quotes, and send out trade confirmations.
Why Does Quoted Price Matter?
Quoted prices are necessary to inform investors about the prices of securities. The information contained in a quoted price is sometimes limited; for example, it may not disclose which market makers are bidding for or offering the security, whether there are limit orders on the security, or the size of potential trades at a particular price. In other words, quoted prices do not give the viewer access to the 'order book' showing who has an interest in a security and at what price. But quoted prices do give traders and investors a basic idea of how a security is doing.
