Once you have found an item you want to buy on eBay and decided you are willing to pay £25 for it but the current price is £2.20, what should you do?

Well, you could bid just £2.40 and probably be the high bidder... but what happens when you leave your computer and someone else comes in and bids £2.60? Do you have to sit in front of your computer day and night until the auction ends to make sure you win? Thanks to eBay's automatic proxy bidding tool, the answer is no.

How does Proxy bidding work?
Here's a step by step guide:

1. An Auction is listed that starts at £1.
2. I come along and submit a maximum bid of £100. The proxy server executes this bid, and as there are no other bids yet (mine is the first), the bid is on me for £1.
3. Now you come along and see that the current bid is £1 and you decide to bid £5. You enter the bid and then you get an immediate outbid notice. Why? Because the proxy system has my £100 maximum bid to execute while keeping the bid at the lowest possible amount.
4. So you see an outbid notice, and the bid goes up to £5.50, with me as the high bidder.
5. You rebid £10 and the same thing happens. I am still the high bidder at £10.50 and will remain so until you or someone else surpasses my initial maximum bid.
6. Now, say you bid £150. The highest bid then falls to you at £101, as you have passed my maximum bid (I'm now out of the running until I place a new maximum bid).
7. If someone should come by and decide to bid £103, then they would get an immediate outbid notice because the proxy system automatically outbid the new bidder…and so on until the new bidder gives up or places a maximum bid which outstrips your £150.
8. Once your maximum bid is reached, you receive an outbid notification by email. You can decide then whether or not you want to increase your maximum bid.

Reserve Price auctions

If you bid on a reserve price auction, and your maximum bid exceeds the reserve price set by the seller, the proxy bidder will automatically raise the bidding to meet the reserve price instead of going up by increments.

Here's how proxy bidding works on a Reserve Price auction:

An auction is listed with a minimum bid of £1. However, the seller has stipulated a reserve price of £10.

Various bidders raise the bidding to £1.40, which is still well below the seller's reserve price.

You come along and place a maximum bid of £11.

The system immediately recognises that your maximum bid exceeds the reserve price and raises the bidding to show that your bid has met the reserve price.

How do I go about Proxy bidding?

When you place a bid for an item, eBay asks you for your maximum bid (see below)

Enter your maximum bid in the box provided and let eBay do the bidding for you!

Note: Proxy bidding is not used for Dutch auctions