Bid and Ask price. Spread

Bid and Ask price. Spread

There are 2 types of currency prices at Forex are Bid and Ask. The price we pay to buy the pair is called Ask. It is always slightly above the market price. The price, at which we sell the pair on Forex, is called Bid. It is always slightly below the market price.

The price we see on the chart is always a Bid price. Later on, we will find out how to check the Ask price in our trading platform. Ask price is always higher than the Bid price by a few pips. The difference between these two prices is called spread. Spread is commission we pay to our broker for every transaction. You’ve probably faced a similar logic in a bank exchanger: rates are always different for sellers and buyers.

SPREAD = ASK – BID

For example, the EUR/USD Bid/Ask currency rates are 1.1250/1.1251. You will buy the pair at the higher Ask price of 1.1251 and sell it at the lower Bid price of 1.1250. This represents a spread of 1 pip.

The more popular is the currency pair, the smaller is the spread. For example, spread for EUR/USD transaction is usually very small or, as traders say, tight. Note that the cost of spread on Forex is usually negligible in comparison with the expenses on the stock or options markets. As spread is quoted in pips, a trader can easily calculate the cost of every trade by multiplying the spread in pips by the value of 1 pip. 

Popular

Japan February exports are seen surging at fastest pace since 2015

In February, Japan's exports probably ascended at the fastest pace for two years due to a softer yen as well as improving global demand, as a Reuters survey showed on Friday…

Asian shares tumble with Japan markets shut

On Monday, stocks in Asia declined with markets in Japan unavailable for a holiday and traders watching oilfield-related stocks after a bankruptcy filing by Singapore's Ezra Holdings…

Greenback surges as yields soar

On Friday, the evergreen buck added against the Japanese yen and euro, drifting away from recent minimums, though revenues were capped as traders focused on a showdown between Donald Trump and members of his own party as for a fresh healthcare bill…

Deposit with your local payment systems

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Internal error. Please try again later

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera