Forex basics · Beginner

Understanding Bid and Ask Price

Two prices, one spread, and the reason a brand new position is already slightly negative.

Last reviewed 15 September 2026 by the MarketPro research desk · Editorial policy

In short

The bid is the price at which you can sell the base currency and the ask is the price at which you can buy it, with the ask always higher. Buy orders execute at the ask and sell orders at the bid, so you cross the spread once per round turn. That is why a new position opens showing a small paper loss equal to the spread.

What to remember

You buy at the ask and sell at the bid, so a new position starts down by the width of the spread. Nothing has left your balance.
Charts usually draw bid prices only, so a short position stop triggers on the ask, above the visible line.
The spread is a live liquidity gauge. When it triples on a familiar pair, providers have stepped back, and that usually precedes the move.
A 1.2-pip spread on 0.20 lots traded twenty times a week is over 200 USD a month of pure execution cost.

Step 3 of 12 on Forex Foundations

PreviousPips, Lots and Contract Sizes NextOrder Types Explained

Every forex quote shows two prices because there are two sides to any exchange. The bid is the price at which you can sell the base currency right now. The ask, sometimes called the offer, is the price at which you can buy it. The ask is always the higher of the two, and the gap between them is the spread. That single piece of structure explains why a new trade shows a small paper loss the instant it opens.

Why two prices exist at all

Someone has to be willing to take the other side of your trade at the moment you want it done. Liquidity providers and market makers perform that function, and they are paid for it by the difference between what they will pay to buy and what they will charge to sell. It is the same arrangement as a bureau de change, where the board shows one rate for buying dollars and a worse one for selling them, for exactly the same reason.

The provider is not predicting the market when it quotes both sides. It is offering immediacy, and immediacy has a price. That price rises when providing it is riskier, which is why the spread is not a constant.

Which price applies to your order

Buy orders execute at the ask. Opening a long and closing a short both cross at the ask.
Sell orders execute at the bid. Opening a short and closing a long both cross at the bid.
You pay the spread once per round turn, split across the entry and the exit rather than charged as a separate line.

Work it through with numbers. EUR/USD is quoted 1.08500 / 1.08512, a spread of 1.2 pips. You buy at 1.08512. The platform immediately values the position at the bid, 1.08500, so it shows about minus 1.2 pips. Nothing has been taken from your balance. The position simply has to travel the width of the spread before selling it back would return your stake.

The chart shows one side only

Most platforms draw candles from bid prices. For a long position that is harmless, since your stop is also on the bid. For a short position it is not, because your stop triggers on the ask, which sits above the visible chart by the width of the spread.

The consequence surprises people regularly: a short stop can be hit at a level the chart never appears to reach. Nothing improper has happened. The ask went there even though the drawn bid line did not. If you trade shorts with tight stops, add the spread to your mental picture of where the level actually sits, or configure your platform to display an ask line.

9 more sections in MarketPro

What makes the spread move

Condition	Effect on spread	Why
London and New York overlap	Tightest	Most providers competing, deepest book
Daily rollover, around 21:00 UTC	Wide	Providers step back as books are squared
Seconds around major data	Very wide	Risk of being run over by a repricing
Sunday open	Wide	Thin participation until Asia is fully active
Exotic pairs, any hour	Persistently wide	Few participants at each level

Read the spread as a live liquidity gauge. When it triples on a pair you know well, the market is telling you that providers have become less willing to stand in front of price. That is information, and it usually arrives before the move rather than after it.

Where it costs you more than you expect

A widened spread can trigger a stop that no genuine trade ever reached, because the bid alone falling far enough is sufficient for a long stop to fire. This is most common in the seconds around a scheduled release, which is one practical argument for not holding tight stops through data unless the strategy specifically calls for it.

The other underestimated cost is frequency. A 1.2-pip spread sounds trivial until you trade it twenty times a week. On 0.20 lots that is about 2.40 USD per round turn, so roughly 48 USD a week, or a little over 200 USD a month in pure execution cost. Against a 5,000 USD account, that is a monthly hurdle the strategy has to clear before anything else happens. The profit calculator puts a real number on it, and the full breakdown of trading costs sits alongside commission and swap in the glossary.

Checking the spread before you click

Check the spread before every entry rather than assuming the advertised figure. Prefer active sessions on the pairs you trade, because the same strategy executed at 03:00 pays materially more for the identical setup. Avoid crossing the spread twice in quick succession by closing and reopening a position you never really wanted to exit, since each round turn is a fresh cost. And when you compare brokers, compare the all-in cost on the pairs and sizes you actually trade, which is the comparison covered in the rebate calculator if part of that cost comes back to you.

The bid and ask are not an obstacle placed in front of retail traders. They are the mechanism that lets you transact instantly at a known price, which is a service worth paying for. What matters is knowing the price you are paying and choosing when to pay it.

Finish this lesson in MarketPro

The rest of Understanding Bid and Ask Price, a quiz that checks it landed, and your place kept in the curriculum.

9 more sections of this lesson
All 320 lessons, with no cap and no paywall
Free on any account, including a free one

In your browserContinue on webor continue on web

Same account as the app · No install · Free to start

Or scan with your phone camera to get the MarketPro app.

Download on theApp Store Get it onGoogle Play

Free account, no card needed.

Not investment advice. Past performance is not indicative of future results.

Run the numbers while this is fresh

Work it through on your own position size. Nothing leaves your browser and there is no sign-up: Pip value calculator, Position size calculator, Margin calculator, Leverage calculator.

Written and reviewed by the MarketPro research desk

MarketPro is a trading-signal and trading-education app operated by Harajuku Holdings LTD (Cyprus). Our signal desk publishes and tracks every trade idea in-app, and every page here is checked against the app's live behaviour before publishing. Last reviewed 15 September 2026. How we produce signals and content · About MarketPro

FAQ

Understanding Bid and Ask Price: questions

Why does my forex trade start in a small loss?

Because you buy at the ask and the platform values your position at the bid. The difference between them is the spread, so a long position is marked slightly below its entry from the first tick. No money has been deducted; the price simply has to travel the width of the spread before closing the trade would return your stake.

What is the difference between the bid price and the ask price?

The bid is what a buyer in the market is willing to pay, so it is the price at which you can sell. The ask is what a seller is asking, so it is the price at which you can buy. The ask is always higher, and the gap between the two is the spread, which compensates liquidity providers for standing ready to trade at any moment.

Why was my short stopped out at a price the chart never touched?

Most charts display bid prices, but a short position is closed by buying, which happens at the ask. The ask sits above the bid by the width of the spread, so it can reach your stop level while the drawn bid candle stops short of it. Displaying an ask line, or mentally adding the spread when placing short stops, removes the surprise.

Trade · Learn · Earn

The whole academy is free in MarketPro

All 320 lessons, 12 guided paths, quizzes and a daily streak. Free on every account, in the app or your browser, with vetted free signals alongside it.

In your browserContinue on webor continue on web Download on theApp Store Get it onGoogle Play

Same account as the app · No install · Free to start

Not investment advice. Past performance is not indicative of future results.