How to read a forex quote: bid, ask, spread and pipettes

A forex quote shows two prices. The bid is the price at which you can sell the base currency, and the ask (also called the offer) is the price at which you can buy it. The ask is always higher than the bid, and the difference between them, the spread, is a cost you pay on every trade.

So if EUR/USD is quoted 1.08502 / 1.08510, you can sell euros at 1.08502 or buy them at 1.08510, and the spread is 0.8 pips. The rest of this guide explains each part of that quote, how to turn it into money, and the practical traps it sets for stop-losses and short positions.

Anatomy of a quote

Take an example quote, as you might see it in a platform's market watch window:

• Pair: EUR/USD
• Bid: 1.08502
• Ask: 1.08510
• Spread: 0.8

Here is what each part tells you:

• EUR/USD names the base currency (euro) and the quote currency (US dollar). The price says how many dollars one euro costs. If you need a refresher, see currency pairs explained.
• Bid, 1.08502, is what the market will pay you for one euro if you sell. Think of it as the broker's (or market's) bid to buy from you.
• Ask, 1.08510, is what you must pay for one euro if you buy. It is the price at which euros are being offered to you.
• Spread, 0.8, is the difference between them in pips: 1.08510 minus 1.08502 equals 0.00008, which is 0.8 of a pip.

The rule that trips people up at first is that both prices are from the market's point of view. You sell at the lower price and buy at the higher price. That is how the people quoting the price earn a margin for providing liquidity.

Pips and pipettes

A pip is the standard unit of movement in a currency pair. For most pairs it is the fourth decimal place, 0.0001. For pairs involving the Japanese yen, it is the second decimal place, 0.01. Our guide to what a pip is covers this in detail.

Most modern platforms quote one extra digit: five decimals for most pairs and three for JPY pairs. That extra digit is a pipette, or fractional pip, equal to one tenth of a pip.

Reading an example EUR/USD price of 1.08517:

• 1 is the whole number;
• 08 is often called the big figure (traders might say "the eight big figure");
• 51 are the pips;
• 7 is the pipette.

Reading an example USD/JPY price of 151.236:

• 151 is the whole number, and dealers would also call this the big figure;
• 23 are the pips (the first two decimals);
• 6 is the pipette.

Many platforms display the pip digits larger and the pipette digit smaller, precisely so you can see at a glance which numbers matter. If you get into the habit of reading the fifth digit as a pip, every distance you calculate will be ten times too big.

How the spread is measured

The spread is always the ask minus the bid, expressed in pips. Some examples with illustrative prices:

• EUR/USD 1.08502 / 1.08510: spread 0.00008, which is 0.8 pips.
• GBP/USD 1.27140 / 1.27155: spread 0.00015, which is 1.5 pips.
• USD/JPY 151.230 / 151.242: spread 0.012, which is 1.2 pips (remember a yen pip is 0.01).
• USD/TRY with an example quote of 32.5000 / 32.5600: spread 0.0600, which is 600 pips. Exotics often have spreads many times those of the majors.

On many platforms the spread column shows points, which are pipettes, rather than pips. A spread shown as 8 usually means 8 pipettes, or 0.8 pips. Check which unit your platform uses before comparing brokers.

What the spread costs in money

To turn a spread into money, multiply the spread in pips by the pip value for your position size. On EUR/USD, where the dollar is the quote currency, a pip is worth about 10 dollars per standard lot (100,000 units), 1 dollar per mini lot and 0.10 dollars per micro lot. See lot sizes and position sizing.

Worked example: the cost of a round trip

You buy 1 standard lot of EUR/USD with the quote above (bid 1.08502, ask 1.08510). These are illustrative numbers.

1. You buy at the ask: 1.08510.
2. If you closed immediately, you would sell at the bid: 1.08502.
3. You are 0.8 pips down the moment you enter. At 10 dollars per pip, that is 8 dollars.
4. For the trade to break even, the bid has to rise to 1.08510, which means the market as a whole has to move up by 0.8 pips.

If your broker also charges a commission, add it on. A raw-spread account with a 0.1-pip spread and a 7-dollar round-turn commission costs 1 dollar plus 7 dollars, or 8 dollars per lot, the same as the example above. Our guide to spreads and commissions shows how to compare accounts using that all-in figure.

Now scale it. A trader who opens and closes ten standard lots a day with a 0.8-pip spread pays around 80 dollars a day in spread, or roughly 1,700 dollars in a month of about 21 trading days. That is not a fee anyone sends an invoice for, which is why it is easy to underestimate.

Which price closes your trade

Every position opens at one side of the quote and closes at the other.

• A long (buy) position opens at the ask and closes at the bid.
• A short (sell) position opens at the bid and closes at the ask.

This has practical consequences for orders, which are covered fully in our guide to order types:

• A stop-loss on a long position is a sell order, so it is triggered when the bid reaches your stop level.
• A stop-loss on a short position is a buy order, so it is triggered when the ask reaches your stop level.
• A take-profit on a short position is also triggered by the ask. If you set it at a level the chart's price touches exactly, it may not fill, because the ask never got there.

Why charts show only one price

Most charting packages plot just one price per bar. On MetaTrader, for example, standard charts are built from the bid price. That creates a common confusion for short sellers.

Worked example: the stop that "never got hit" on the chart

You sell GBP/USD at 1.27140 (the bid) with a stop-loss at 1.27300, 16 pips away. Illustrative numbers again.

1. Late in the evening, around the daily rollover, the spread widens from 1.5 pips to 6 pips.
2. On the bid chart, the highest price reached is 1.27250, 5 pips below your stop. It looks safe.
3. But with a 6-pip spread, the ask at that moment is 1.27310. Your stop is a buy order triggered by the ask, so it fills at about 1.27310.
4. You are stopped out, and the chart never shows the price reaching your stop.

Nothing improper happened: the ask simply reached your level. You can avoid surprises by turning on the ask line in your platform's chart settings, by allowing for the typical spread when placing stops on short trades, and by being cautious with tight stops around the times when spreads widen. Our guide to where to put a stop-loss covers stop placement more broadly.

Why spreads change

On most retail accounts the spread is variable (also called floating): it moves with market conditions. It is usually narrowest when liquidity is deepest and widens when liquidity drains. Typical times for wider spreads include:

• The daily rollover at 5pm New York time, when liquidity is thinnest. See forex market hours and sessions.
• Major data releases and central bank decisions, when liquidity providers widen their prices until the news is absorbed. Our guide to how to use an economic calendar shows how to see these coming.
• The Monday open, when the first prices after the weekend may be far from Friday's close.
• Holiday periods, especially between Christmas and New Year.
• Less traded pairs at any time outside their home markets' hours.

Some brokers offer fixed spreads, which stay the same in normal conditions. They are generally wider than a variable spread's typical level, and the broker may still widen them, requote or apply restrictions in fast markets, so read the account terms carefully.

When you compare brokers, the headline minimum spread is the least useful number. Average spreads over a typical day, and what happens at busy and quiet times, tell you far more. See how to choose a forex broker and how we rank brokers.

The mid price

Halfway between the bid and ask is the mid price. It is what you see quoted in news reports, currency converters and many data services. In our example, the mid of 1.08502 and 1.08510 is 1.08506.

You cannot trade at the mid. It is useful for comparing prices across sources, but when you are calculating your entries, stops and targets, work from the side of the quote you will actually deal on.

Direct and indirect quotes

You may come across the terms direct and indirect quote, particularly in textbooks.

• A direct quote shows the price of one unit of foreign currency in your home currency. For someone in the US, EUR/USD at 1.0850 is a direct quote: one euro costs 1.0850 dollars.
• An indirect quote shows how much foreign currency one unit of your home currency buys. For the same US reader, USD/JPY at 151.23 is an indirect quote.

Which is which depends on where you are, so in trading it is more useful to ignore the terms and simply remember the base and quote rule: the price is the amount of the second currency needed for one unit of the first.

Reading the market depth

Some platforms show a depth of market window. Instead of a single bid and ask, it lists several prices on each side with the volume available at each. The best bid and best ask at the top are the prices in the normal quote. Lower down are worse prices with more size. On retail forex this is the broker's or its liquidity providers' depth, not a view of the whole market, because there is no central order book in the over-the-counter forex market. It can still show you that a large order may fill partly at worse prices, which is one source of slippage.

How dealers talk about prices

If you read market commentary you may see prices written in shorthand. A dealer quoting EUR/USD at 1.0850 / 1.0852 might just say "fifty, fifty-two", because everyone already knows the big figure. "Yours" means I sell to you; "mine" means I buy from you. A move "through the figure" means the price has crossed a round number such as 1.0900. You do not need any of this to trade, but it explains why commentary sometimes refers to "the 08 handle" or "a big figure move" of 100 pips.

Common mistakes

• Treating the fifth decimal as a pip. A move from 1.08510 to 1.08520 is one pip, not ten.
• Forgetting the spread on short trades. Short positions close at the ask, so stops and targets need to allow for the spread, especially when it widens.
• Judging a broker by the minimum spread. The average spread over the hours you trade is what you will pay.
• Ignoring the spread in your plans. A strategy aiming for 5 pips a trade with a 1.5-pip spread is spending 30% of its target on costs before anything else.
• Placing market orders into news. Spreads can widen dramatically for a few seconds, and you will fill on the wide side.
• Confusing the mid price with a tradeable price. Prices in news headlines are mid prices.

None of this makes trading less risky by itself. Most retail CFD accounts lose money, and leverage magnifies losses as well as gains; see our risk warning. But costs are one of the few things you control, and reading the quote properly is where controlling them starts.

Frequently asked questions

Do I buy at the bid or the ask?

You buy at the ask (the higher price) and sell at the bid (the lower price). A long position closes at the bid, and a short position closes at the ask.

What is a good spread for EUR/USD?

It depends on the account type and time of day. On a raw-spread account, EUR/USD often trades well under 1 pip during the main sessions, with a separate commission. On a standard spread-only account, the spread includes the broker's markup and is typically higher. Compare the all-in cost including commission, not the spread alone.

What is a pipette?

A pipette is one tenth of a pip: the fifth decimal place on most pairs and the third on JPY pairs. Brokers quote in pipettes so spreads and prices can be more precise.

Why did my stop-loss trigger when the chart did not reach it?

Most likely the spread widened. Charts are usually drawn from the bid price, but a stop on a short position is triggered by the ask. When spreads widen, often at rollover or around news, the ask can reach your stop while the bid line on the chart stays below it.

Why is the spread wider at night?

Around 5pm New York time, liquidity is at its lowest for the day and liquidity providers widen their quotes while they roll positions over. Spreads usually narrow again once Asian markets are properly open.

Is the price I see the same at every broker?

No. Forex has no central exchange, so each broker streams its own prices based on its liquidity providers and its markup. Prices at reputable brokers should be very close, but they are not identical, and spreads differ.