Buy / Sell Spread

Buy / Sell Spread
All Forex quotes include a two-way price, the bid and ask. The bid is always lower than the ask price.

The bid is the price that the seller is willing to buy the base currency in exchange for a quote currency. This means that the bid is the price at which you (as a trader) will sell.

The issue price at which the seller will sell the base currency in exchange for a quote currency. That means you ask is the price at which you buy.

The difference between bid and ask price is popularly known as the spread.

Let's look at an example of price quotation made by the trading platform:

On this GBP / USD quote, the bid price is 1.7445 and the ask price is 1.7449. Look at how this broker makes it so easy to trade away your money.

If you want to sell GBP, you click "Sell" and sold at 1.7445 pounds. If you want to buy GBP, you click "Buy" and buy at 1.7449 pounds.
In the following cases, we will need to use fundamental analysis to help us decide whether to buy or sell a particular currency pair. If you always fell asleep during your economics class or just flat out skipped economics class, do not worry! We will cover fundamental analysis in a later lesson. For now, try to pretend that you know what happens ...