Bid/Ask Prices and Spread
A currency pair is always quoted in two prices: Bid for sale and Ask for purchase of a base currency for the quote one.
The presented quotation 1.4110 | 1.4112 for the EURUSD currency pair means we may immediately:
- Sell 1 EUR for 1.4110 USD (at the Bid price)
- Buy 1 EUR for 1.4112 USD (at the Ask price)
Both Bid and Ask prices are used on complete trading operation because opening and closing a position implies performing actions of opposite directions:
- Opening a Buy position means buying while closing a Buy position means selling,
- Opening a Sell position means selling while closing a Sell position means buying.
Spread is the difference between Bid and Ask prices. Spreads of various currency pairs differ from each other. The size of the spread is measured in pips. For the EURUSD currency pair in our example the spread is equal to 2 pips.
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