What are the BID and ASK prices in Forex

In this article, you’ll learn what BID and ASK prices are, and why sometimes a trade closes even if the price hasn’t reached the level you set.

Let’s get started.

The terms BID and ASK represent the best available prices at which an instrument can be bought or sold at a given moment.

• The BID price is the highest price a buyer is willing to pay for the asset right now;
• The ASK price is the lowest price a seller is willing to accept for the same asset.

A trade occurs when both the buyer and the seller agree on a price for the asset.

On your trading platform, you’ll always see two prices—one for buying and one for selling. The lower price is the BID (sell price), and the higher one is the ASK (buy price).

You buy at the higher price (ASK) and sell at the lower price (BID).

The difference between the buy and sell price is called the spread. The spread reflects the liquidity of the asset—the higher the liquidity, the tighter (smaller) the spread, and vice versa.

In the image above, you can see a currency pair quote. As mentioned earlier, there are always two prices—the buy price and the sell price.

In this case, the price at which you would sell is 1.17893 (the BID price), and the price at which you would buy is 1.17903 (the ASK price). The difference between the two prices is 0.00014, which is called the spread.

The spread is usually the lowest on the EUR/USD pair since it’s the most heavily traded currency pair.

From the broker’s perspective, the spread acts as a type of fee they earn for providing you with access to the global financial markets.

To learn how to get started trading the financial markets, check out this article:

>> Forex Trading: A Complete Guide for Beginners

Trade entry and exit

On most trading platforms, by default, only the BID price is displayed. In the settings, however, you can enable the option to also show the ASK price. Keep in mind that all charts reflect movements of the BID price only.

When you open a buy trade, you enter at the ASK price but close the trade at the BID price—whether it’s a profit or a loss.

The more interesting case is with a sell trade. You open the position at the BID price, but it will close at the ASK price. This often creates situations where you don’t see the price reaching your Stop Loss level on the chart, because it’s the ASK price (which is higher than the BID) that triggers it.

Similarly, if your trade is in profit and approaching your Take Profit, the BID price you see on the chart needs to move beyond your Take Profit level for the ASK price to actually close the trade.

At the end of the day, practice is the best teacher. Download a trading platform and test what you’ve learned in real conditions.

When you read on forums that a broker didn’t close a trade in profit, or that a Stop Loss was triggered even though the price never reached that level, keep in mind - the issue might not be with the broker, but rather with a lack of understanding.

In addition, almost all brokers offer a floating spread, which can widen at times. This means the ASK price can move even higher and trigger your Stop Loss earlier than expected!