Which price is most important when you are selling short?

When selling short, the most important price to consider is the bid price. This is because when you initiate a short sale, you are effectively borrowing shares to sell them at the current market price, which you will later need to buy back to return to the lender. The bid price represents the highest price that a buyer is currently willing to pay for those shares, and when you close your short position, you will be buying shares back at the bid price.

When you sell short, your goal is to sell at the market price and then repurchase the shares at a lower price, ideally at or below the bid price when closing the position. Therefore, the bid price is crucial for calculating your potential profit or loss when you eventually cover your short position.

Other prices such as the ask price, market price, or offer price do not have the same direct impact on the profitability of the short sale. The ask price indicates the lowest price a seller is willing to accept for a security, while the market price reflects the last price at which a trade occurred. Understanding the bid price allows short sellers to make informed decisions about executing their trades effectively.