🧱 Basics·beginner

Bid / Ask

Also called: bid price, ask price, bid/ask

The bid is what the market will pay you to sell; the ask is what the market will charge you to buy.

Every forex quote has two prices. The bid is the higher-is-better price buyers are willing to pay. The ask is the lower-is-better price sellers are asking for. When you open a position, you always pay the "bad" side: buying fills at the ask, selling fills at the bid. The gap between them is the spread. The narrower the spread, the more liquid and efficient the market is. EUR/USD during London hours has one of the narrowest spreads in the world because thousands of banks and traders are constantly making markets. You'll never see a bid that's higher than the ask in a working market. If that happens, the broker has lost its feed and you should stop trading until it comes back.

Real trade example

During the Aug 2019 JPY flash crash, USD/JPY's bid-ask gap widened to over 400 pips for a few minutes — the market effectively stopped functioning while liquidity dried up.

Related terms

Spread

beginner

The difference between the buy (ask) and sell (bid) price — your cost of entering a trade.

Pip

beginner

The smallest standard price move in a currency pair — the building block of every forex profit or loss.

Pipette

beginner

One-tenth of a pip — the fifth decimal place on most forex quotes, shown by brokers that quote fractional pips.

Liquidity

intermediate

How easily you can buy or sell an asset without moving its price — high liquidity means tight spreads and instant fills.

Cross Pair

intermediate

A pair that doesn't include the US dollar — used to trade one non-USD currency directly against another.

Tick

intermediate

The smallest possible price change for a given instrument — one tick is the minimum increment a price can move.

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