When you put in a bid on an auction, there is a minimum bid that is required to be winning the auction. If you put in a higher bid, the bid will be stored, then automatically bid for you when someone else bids. The final bid will never be more than what your original maximum bid was specified as.

Note: The first bid wins on ties. If a proxy bid is put in at $5, and a second person puts in a bid at $5, then the first bid will win at $5, and the second bidders bid will get reduced to $4.99.