“Hit the bid” is a term used in investment circles to describe a situation where a broker sells an asset at the best possible price given the current market conditions. The broker will rank all possible bid prices for the security and target the highest bids that other brokers are willing to pay for the security to get the best possible price for their client.
“Hit the bid” is a slang term used in investment circles to describe a situation where one broker is willing to sell an asset at a price that is spread by a different broker. Typically this means accepting an offer from another broker that is currently the best possible offer given the current market condition. In effect, the bidder who is trying to sell the asset decides to compromise or beat the other broker’s offer as the means to effect a transaction between the two parties.
The general idea behind a successful bid strategy is to secure the best possible price for an asset that an investor wishes to sell. To that end, the broker managing the sale on behalf of that investor will often set a sale price based on factors such as the current market price and the future potential for the asset to gradually increase in value. With that asking price in mind, the broker will make the rounds to see what kind of price the market will have. Often the best possible price will be equal to the current market price associated with the security. At other times, the best price may be more or less than the market price. The broker will rank all possible bid prices for the security, then target the highest bids that other brokers are willing to pay for the security. This way, the broker can get the best possible price for his client.
One way to understand what happens in a successful bid scenario is to consider an asset that the investor is willing to sell at a price of $100 US dollars (USD) per share. The broker will report the price and identify the offers of other brokers acting on behalf of their clients. If no one is willing to pay the $100 per share, but there is someone who is willing to pay $99 per share, the selling broker will consult with the investor and, if the offer is acceptable, proceed to reach the offer and arrange The deal with the buying broker.
Many brokers hit the offer every trading day. Depending on the type of investment involved and the demand for security, sorting through potential offers can take some time. This is particularly true if the asset in question is perceived by investors as having a significant amount of growth potential, either in the short or long term. If there is relatively little interest in the asset the investor wants to sell, the broker may find that identifying the right deal to hit can be quickly managed.
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