Rotating Image Header

Bid and Ask for Currencies

For currencies, like for stocks, there is not just one price to worry about.

A complete quote is given as a bid price and and ask price. So if we are using a trading platform, we might see the following quote for the EUR/USD pair:

Bid 1.2105 Ask 1.2107

This means that an institution (let’s say a bank) is trying to buy (Bid) the euro versus the dollar at 1.2105 and another institution is offering to sell euros versus the dollar (Ask) at 1.2107. As currency day traders, we can buy from the bank that is selling at 1.2107 or sell to the bank that is buying at 1.2105.

The available spreads right now in the Forex market are tight enough to compete with the spreads in stocks. In fact, many times the spreads available for liquid currency pairs are much tighter than for the average stocks.

Back: Trading Examples | Next: Order Types