THE ETERNAL SOVEREIGN

Bid & Ask and Spread

Bid and Ask

Bid price

  • The Bid is the highest price buyers are willing to pay
  • If you sell immediately, you sell at the bid
  • Think of it as: “What the market will pay me right now”

Ask price (also called Offer)

  • The Ask is the lowest price sellers are willing to accept
  • If you buy immediately, you buy at the ask
  • Think of it as: “What it costs to buy right now”

Example

If EUR/USD shows

  • Bid: 1.1048
  • Ask: 1.1050

This means

  • You can sell EUR/USD at 1.1048
  • You can buy EUR/USD at 1.1050
  • The difference (0.0002) is the spread

Why bid is always lower than ask

  • The gap between them is the spread
  • The spread represents:
    • Broker/market maker profit
    • Liquidity conditions
    • Transaction cost for traders

Key takeaway

  • Buy → Ask
  • Sell → Bid
  • Spread = Ask − Bid