Bid And Ask In Forex Market

On this page, you will learn everything about Bid and Ask in Forex market online. As a trader, these are actions that every trader makes while buying or selling currencies. Therefore, one must understand them thoroughly before trading and clear any confusion over the terms. Read on to know in detail about the definition of Forex Bid and Ask prices as well as the Bid Ask Spread in forex.

The Forex Bid And Ask Prices

Bid Price

The price at which the online traders are willing to buy a certain currency pair is known as the Bid Price. It is seen on the left side of the Forex quote. This is the price which is set for the selling of the trader's base currency. For example, for the EUR/USD quote 1.2689/29, the bid price is 1.2689. this indicates that you can sell one Euro for $1. 2689

Ask Price

The price at which the forex market is willing to sell the currency pair is called the Ask price and is seen on the right side of the forex quote. As in the previous example, for the EUR/USD quote 1.2689/29, the ask price is 1.2729, meaning s you can buy 1 Euro for $1. 2729.

The Forex Bid Ask Spread

The difference between the bid and ask prices in forex is known as the bid ask spread in forex. In other words, the amount by which the ask price is higher than the bid price. Representing the difference between the purchase and the sale rates, it signifies the expected profit of the online Forex trading transaction.

For example, if the bid price is $2.2 and the ask price is $2.3, then the bid/ask spread is $0.1.

The value of forex Bid Ask spread is set by the liquidity of the market. A highly liquid market reflects that may currencies are being bought and sold and the Bid Ask Spread in forex will be lower. Investors often prefer foreign currencies with a lower bid/ask spread because it means not wasting any money on the bid/ask spread difference and it also allows the trader to cut down on his losses.

The Forex bid ask spread is usually worth only a few pips, because of the high liquidity on the online Forex market. Now that you have a solid understanding of Bid and Ask in Forex , you can go ahead and trade with confidence