Why a quote has a pair of prices
When you look up a currency pair such as EUR/USD, you see a pair of prices instead of a single one.
- Bid is the price at which the market (your broker or a dealer) will buy from you. You sell at the bid.
- Ask (also called offer) is the price at which the market will sell to you. You buy at the ask.
The ask is always higher than the bid. The gap between them is the spread. It is the price of getting in and out of a position, and the dealer or liquidity provider earns it by quoting both sides.
A money changer works the same way. The board shows a "we buy" rate and a "we sell" rate for US dollars. If you buy dollars and sell them back straight away, you get fewer rupees than you paid. Forex quotes follow the same logic. See Currency pairs for how base and quote currencies are read.
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Bid price vs ask price: which one you trade at
| Action | Opens at | Closes at |
|---|---|---|
| Buy (go long) | Ask | Bid |
| Sell (go short) | Bid | Ask |
A buy position opens at the higher price and closes at the lower one. A new trade therefore shows a small loss as soon as it opens, equal to the spread. Price has to move in your favour by at least the spread before the trade breaks even. More on direction in Long and short.
The same rule decides when orders trigger:
- Buy limit and buy stop orders trigger when the ask reaches your price.
- Sell limit and sell stop orders trigger when the bid reaches your price.
- Stop loss and take profit on a buy close at the bid.
- Stop loss and take profit on a sell close at the ask.
See Limit orders, Stop orders and Stop loss for the details.
How the chart shows bid and ask
In MetaTrader 4 and MetaTrader 5, candles and bars are built from bid prices by default. The ask is not drawn unless you turn it on. In the chart properties you can enable the "Show Ask line" option, and a second horizontal line then appears above the bid line. The distance between the lines is the current spread.
This has a practical effect. Say you hold a sell position with a stop loss above the market. Your stop is checked against the ask, but the chart draws bid candles. If the spread widens, the ask can touch your stop while the bid candle never reaches it on the chart. The trade then closes even though the chart seems to show price never got there. Experienced traders allow for the spread when they place stops on short positions. Reading charts is covered in Reading charts.
Spread as the difference
Spread = ask − bid. It is measured in pips or points. See What is a pip and Pips, points, pipettes.
To turn a spread into money for a given lot size, use the spread or pip value calculators on Calculators. Enter the instrument, lot size and the bid and ask you see. This page does not quote example figures because spreads change all the time.
The spread is not fixed in most markets. It tends to widen when:
- liquidity is thin, for example around the daily rollover or late in a session
- major news is released and volatility jumps
- the market reopens after a weekend or holiday gap
Background: What is spread, Fixed vs floating spread, Liquidity and Price gaps.
Precise definitions for experienced traders
- Bid: the highest price a buyer is currently willing to pay. In a dealer quote, it is the price the dealer stands ready to buy at.
- Ask / offer: the lowest price a seller is currently willing to accept.
- Mid price: the average of bid and ask. Data vendors and some charting tools use it, but it is not a price you can trade at.
- Raw vs marked-up spread: some accounts pass through a tight interbank spread and charge a separate commission. Others build the dealer's charge into a wider spread. To compare them, add spread and commission together. See Commission per lot and Total trading costs.
- Slippage: the gap between the bid or ask you saw and the price you actually got, caused by price movement during execution. See Slippage.
Conditions on any specific account, including typical spreads, should be checked on the broker's official site or in your personal area. They are not guaranteed here.
Leveraged forex and CFD trading can lose money fast. Spread costs add up with every trade, and a widening spread can trigger stops you did not expect.
Frequent questions
What is the bid ask meaning in simple words?
The bid is the price you can sell at. The ask is the price you can buy at. The ask is higher, and the difference is the spread.
Do I buy at the bid or the ask?
You buy at the ask and sell at the bid. A buy position closes at the bid, and a sell position closes at the ask.
Why does my new trade show a loss immediately?
It opened at one side of the quote and is valued at the other side. The loss you see equals the spread.
Why did my sell stop loss trigger when the chart never reached it?
The chart shows bid prices, but a stop on a sell position is checked against the ask. A wider spread can push the ask to your stop.
Is the spread the same all day?
Usually not. It often widens during low liquidity, around news releases and at market open after weekends.