Bid and ask

A forex quote is always two prices. The bid is the price at which the broker or market will buy from you, so it is the price you sell at. The ask, also called the offer, is the price at which they will sell to you, so it is the price you buy at. The ask is always higher than the bid.

Worked example

EUR/USD is quoted 1.08502 / 1.08510.

• If you buy, you pay the ask: 1.08510.
• If you sell, you receive the bid: 1.08502.
• The spread is 0.00008, which is 0.8 pips.

If you buy and immediately close the trade, you sell at the bid and lose the spread. On one standard lot that is 0.8 pips times 10 dollars, or 8 dollars. This is why every new position starts slightly in the red.

How charts show it

Most trading platforms draw charts using the bid price. That matters for orders:

• a buy position is opened at the ask and closed at the bid;
• a sell position is opened at the bid and closed at the ask.

So a sell stop-loss can be triggered by the ask price touching your level even if the bid-based chart never shows the price getting there. This is most noticeable when spreads widen around news or the daily rollover.

Practical note

The last digit in a five-digit quote is a pipette, a tenth of a pip. Our guide to reading a forex quote covers the conventions, and why spreads widen explains when the gap gets bigger.