Mid Price
The mid price is the average of the bid price (the highest price a buyer is willing to pay) and the ask price (the lowest price a seller is willing to accept) for a security. The mid price provides an estimate of the fair market value of a security and is often used as a reference point for trades, particularly in over-the-counter (OTC) markets where bid-ask spreads can be wide.
Example
If the bid price for a stock is $50 and the ask price is $52, the mid price would be $51, representing an approximate fair value between buyers and sellers.
Key points
• The average of the bid and ask prices for a security, representing an estimate of its fair market value.
• Often used as a reference point in over-the-counter (OTC) markets or when bid-ask spreads are wide.
• Provides a balanced view of pricing between buyers and sellers.
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