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What is Bid and Ask

What is Bid and Ask

This article will show you what is bid and ask price and what is spread?  The Bid and Ask is the difference between the buying and selling prices of any currency, stock or commodities. The difference between the bid price and the ask price is called the spread or transaction cost. The price of the currency pair seen on the chart is the final price at which the buyer and seller agree to complete the transaction.

Bid and Ask

In foreign exchange or stock trading, you will always see two price tags, one is called the bid price and the other is called the ask price. Generally, the ask price of any currency pair is slightly higher than the bid price. The ask price is the price at which the seller is ready to sell, and the bid price is the price at which the buyer is ready to buy.

what is bid and askIn the above chart, the difference between the ask price and the bid price is called the spread, and the spread is the commission of the market maker or broker. For example: If the buying price of the currency pair EUR/USD is 1.1251 and the selling price is 1.1250. Therefore, the bid-ask spread is equal to 1.1250-1.1251 = 0.0001 which is the broker’s profit.

What is Spread?

In foreign exchange trading, there are always two prices for buying (bid) and selling (ask). The price difference between buying and selling is called the spread. For example, if GBP/USD trading at a bid price of 1.2524 and a ask price of 1.2525, the difference between the bid and ask prices is 0.0001, which is called the spread. Therefore, in this example, you must pay an additional fee of 1 pip to enter and exit the transaction.

In foreign exchange transactions, we should always choose brokers that provide extremely low spreads (less than 1 pip). In major currency pairs (such as EUR/USD, GBP/USD, USD/JPY), the spread should be almost zero.

Asvice

If you are looking for True ECN broker, then we recommend that you open an account with IC Marrket.  Which is the lowest spread broker in the list of all best forex  brokers.