Ask size is the exact number of financial instruments, such as shares or contracts, that a seller is offering to sell at the current ask price.
Understanding ask size
In financial markets, order books display the price sellers want and the volume they have available at that price. This volume is the ask size. It tells traders how much liquidity is present on the sell side of the market before the price moves to the next available level.
When a buyer places a market order, their order consumes the available ask size. If the buyer’s order is larger than the ask size at the best available price, the remaining portion of the order fills at the next highest price level. Traders monitor these sizes to gauge short-term supply and demand imbalances.
Ask size is typically displayed in round lots. In many equity markets, a displayed size of 1 means 100 shares. This varies depending on the specific exchange and the asset class being traded. In foreign exchange or cryptocurrency markets, the size reflects the base currency units or tokens directly. Elephants trading across different international venues need to verify the lot size rules of the specific exchange they use.
Example
Suppose an Elephant decides to buy shares in a local peanut distribution company. They look at the current order book and see the lowest available ask price is $5.00. Next to this price, the ask size is listed as 400 shares.
If the Elephant wants to buy 500 shares at the market price, their order will first consume the 400 shares available at $5.00. Since the ask size at $5.00 is depleted, the remaining 100 shares of the Elephant’s order will fill at the next available ask price, which might be $5.02. The total cost of the trade depends directly on the ask size present at the best price.