Bid, ask & spread
Two prices, not one
A pair always shows two prices, like a currency exchange booth at the airport. The bid is the price you can sell at. The ask is the price you can buy at, and it is always a little higher. That way the broker earns something on every trade.
Remember: Buy at the ask, sell at the bid.
The spread is your entry cost
The gap between ask and bid is the spread. If EUR/USD is 1.0850 bid and 1.0852 ask, the spread is 0.0002. Because you buy at the higher price and could only sell at the lower one, every trade starts slightly in the red by the spread. Popular pairs have small spreads; rare (exotic) pairs have big ones.
Test yourself
When you buy a pair, you pay the…
Ask priceThe ask is what sellers want; buyers pay it.
When you sell a pair, you get the…
Bid priceThe bid is what buyers will pay.
EUR/USD shows 1.0850 bid / 1.0852 ask. What is the spread?
0.0002Ask minus bid: 1.0852 − 1.0850 = 0.0002.
Why does a new trade start slightly negative?
You bought at the ask but can only sell at the bidClosing right away means selling at the lower bid: you lose the spread.
Which usually has the widest spread?
An exotic like USD/TRYLess trading, wider spreads.
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