Historically,
the concept of bid and ask started in the olden days when merchants used the
“bid and ask” concept to sell and buy goods.
“Bid” refers
to the price that a buyer is willing to pay for that item. And, “Ask” or
“Asking price” is the price that a seller accepts to sell his product.
So
similarly, when it comes to the forex market.
Any currency
has two prices.
The one to
the left is the bid price, and the one to the right is the ask price.
The Bid
price is the price that somebody is willing to pay for a currency if you need
to sell it.
And the ask
price is the price that someone will sell to you at if you wish to buy.
The difference between the bid and the ask price is called the spread. This is the
fee that is taken by your broker as a commission. And it is charged whenever
you open a new position.
You might
not see the words “bid and ask” on some trading platforms. Often these words
are replaced with the words “sell and buy”. “Sell” meaning “bid” and “buy”
meaning “ask”.
Now, take a
look at the examples of how “bid” and “ask” may be displayed on some trading
platforms.
Thanks for
watching.
