BID PRICE, ASK PRICE & SPREAD

Have you ever been to a Money Changer counter to exchange foreign currency? There are two columns, namely the sell and buy columns. Similarly in online forex trading, these values are written in two prices namely bid & ask. The bid price is usually lower than the ask price. To understand it further, see the image below.


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There are 2 different tabs for selling and buying. The first tab is ‘sell by market’ and the second tab is ‘buy by market’. At the top of each tab, it has its own price.

The price above the ‘sell by market’ tab is called Bid Price while the price above the ‘buy by market’ is called Ask Price.

Bid Price is the price at which a broker is willing to buy from a trader. If you sell EURUSD pair, you will sell at 1.3629.

Ask Price is the price at which the broker is willing to sell to the trader. If you buy the EURUSD pair, you will buy at the price of 1.3630.

In the example above, we have the option to sell Euro at 1.3629or buy Euro at 1.3620. The difference between the bid and ask price is called Spread.


Key Links:

What is Forex?
History of Forex?
What are traded in Forex?

Types of Currency Pair?


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