Bid Price Forex: Complete Trading Guide from Definition to Strategy

The Two Essential Prices

　　In the world of forex trading, every currency pair has two prices, not one. Understanding these two prices is key for success.

　　The bid price is the price at which your broker will buy the base currency from you in exchange for the quote currency. Put simply, it's the price you get when you sell a currency pair.

　　You cannot understand the bid price by itself. It always comes with a partner: the ask price.

　　The ask price, also called the offer price, is the price at which your broker will sell the base currency to you. This is what you pay when you buy a currency pair.

　　The gap between these two prices matters a lot. We call it the bid-ask spread. This spread isn't just a small detail; it's a main cost you must pay to make a trade.

　　Think of a currency exchange booth at an airport. They show a "WE BUY" price and a "WE SELL" price for dollars. The "WE SELL" price is always higher than their "WE BUY" price. That gap is how they make money. Your forex broker works the same way. The "WE BUY" is their bid; the "WE SELL" is their ask.

Core Trio Deconstructed

　　To trade well, you must know how the bid, the ask, and the spread work together. These three form the basic language of the market, and you need to know them well.

Reading a Forex Quote

　　Let's look at a normal quote for the Euro versus the U.S. Dollar, the most traded pair in the world.

　　You will see it on your screen like this: EUR/USD 1.0850 / 1.0851.

　　This shows two prices, not one.

　　The first number, 1.0850, is the Bid Price. This is what you get if you SELL the EUR/USD pair.

　　The second number, 1.0851, is the Ask Price. This is what you pay if you BUY the EUR/USD pair. The ask is always higher than the bid.

Calculating the Spread

　　The spread is just the gap between the ask and the bid. It's your broker's fee for helping with the trade.

　　The math is easy: Spread = Ask Price - Bid Price.

　　Using our example: 1.0851 (Ask) - 1.0850 (Bid) = 0.0001.

　　In forex talk, this tiny gap is called a pip. A move from 1.0850 to 1.0851 is one pip. So, the spread in this case is 1 pip.

Bid vs. Ask Table

　　To help you remember, here's a simple table that shows the key points. Check these facts before each trade.

　　This table makes clear what you do and what the broker does in each trade, so you know which price applies to your action.

Finding the Bid Price

　　Moving from ideas to the real trading screen is a big step. Knowing what bid price forex quotes mean is one thing; finding and using them on your platform is what counts.

　　As traders with lots of time in the market, we know these prices show up in a few key spots.

The Market Watch Window

　　The first place you'll see live bid and ask prices is in your platform's "Market Watch" or "Quotes" panel. This is often a list of currency pairs on the side of your screen.

　　You'll see two columns of prices that keep changing next to each pair. The rule is the same everywhere: the left column is the Bid Price, and the right column is the Ask Price. This gives you a quick view of the market.

Visualizing on the Chart

　　This is where many new traders get lost. Most trading charts (like those on MetaTrader 4 or 5) only show one price line by default. This line is almost always the bid price.

　　A common mistake is thinking this line shows the price for both buying and selling. It does not.

　　We strongly suggest going into your chart settings and turning on the "Show Ask Line" option. A second line, just above the bid line, will appear.

　　This is very important. When you buy, your trade happens at that higher ask line, not the main bid line you were watching. This is why a buy trade often seems to start with a small loss—you've just paid the spread between the two lines.

The Order Execution Window

　　When you're ready to make a trade, you'll open the "New Order" or "Order Execution" window.

　　Here, the platform makes things very clear. It will show the current bid and ask prices right in the window, often next to the "Sell by Market" and "Buy by Market" buttons.

　　This is your final check. The price by the "Sell" button is the bid price you'll get. The price by the "Buy" button is the ask price you'll pay.

Bid Price in Action

　　Understanding the bid price goes far beyond just knowing what it is. It directly affects how your orders work and, in the end, how much money you make. It plays a clear role in your entries and exits.

Market Order Execution

　　When you want to enter the market right away, you use a market order. The bid price is key to this action.

　　If you click "Sell by Market," your position opens right away at the current Bid Price.

　　On the other hand, if you click "Buy by Market," your position opens at the current Ask Price.

　　The big insight here is that the moment you make any trade, you pay a cost equal to the spread. Your trade will always start with a small paper loss because you buy at the higher price (ask) and sell at the lower price (bid).

Stop Loss and Take Profit

　　This is the most vital and misunderstood part of the bid price for new and growing traders. How your exit orders trigger depends on whether you are long (a buy trade) or short (a sell trade).

　　For a Buy Trade (Long Position): You entered by buying at the ask price. To exit, you must do the opposite: sell. So, all exit orders for a buy trade are triggered by the Bid Price.

• Your Take Profit order on a buy trade triggers only when the Bid Price rises to your chosen level.
• Your Stop Loss order on a buy trade triggers only when the Bid Price falls to your chosen level.

　　For a Sell Trade (Short Position): You entered by selling at the bid price. To exit, you must do the opposite: buy. So, all exit orders for a sell trade are triggered by the Ask Price.

• Your Take Profit order on a sell trade triggers when the Ask Price falls to your level.
• Your Stop Loss order on a sell trade triggers when the Ask Price rises to your level.

A Practical Scenario

　　Let's make this very clear with an example that confuses many traders.

　　Say you BUY EUR/USD. The quote is 1.0850 / 1.0851. Your entry fills at the ask price of 1.0851. You set a Stop Loss at 1.0830 and a Take Profit at 1.0900.

• Your Take Profit will only trigger if the BID PRICE (the lower price) rises all the way to 1.0900. The ask price will be a bit higher, maybe at 1.0901, when this happens.
• Your Stop Loss will only trigger if the BID PRICE falls to 1.0830.

　　This explains why traders often say: "The price on my chart touched my stop loss level, but my trade didn't close!" They were watching the bid line on their chart. For their short trade's stop loss to trigger, the higher ask line needed to reach that level. Knowing this helps you avoid big frustration and set more exact exit points.

Why Spreads Change

　　The bid-ask spread is not fixed. It gets wider and tighter based on market conditions. Knowing what affects the spread helps you control your trading costs better.

　　A pro trader knows that the cost of entry can be partly managed by choosing when and what to trade.

Four Key Factors

　　We can boil down the main drivers of spread changes to four key areas.

• 　　Liquidity: This is the biggest factor. Liquidity means how many active buyers and sellers are in a market at any time. In a very liquid market, like the EUR/USD or USD/JPY pairs, there is strong competition among banks to offer the best price. This forces the bid and ask prices closer together, making tight spreads. In contrast, in a market with low liquidity, such as USD/TRY (U.S. Dollar vs. Turkish Lira), there are fewer players. With less competition, brokers widen the spread to cover the higher risk of filling an order. The forex market trades over $7.5 trillion per day, based on the Bank for International Settlements (BIS) 2022 survey. The major pairs make up most of this volume, which is why their bid price forex spreads are often less than a single pip.

• 　　Volatility: Market swings, especially during big economic news, directly impact spreads. When events like the U.S. jobs report or a central bank rate decision come out, prices can move very fast and unpredictably. To protect themselves from this sudden risk, brokers will briefly widen their spreads a lot. Trading during these times can be very costly.

• 　　Time of Day: The forex market runs 24 hours a day, but its liquidity flows with the world's major financial centers. Spreads are usually tightest when major sessions overlap, most notably when London and New York are both open. During these hours, trading volume peaks. In contrast, spreads tend to widen during slower times, such as the gap between New York's close and Tokyo's open, or during bank holidays.

• 　　Broker Model: The type of broker you use also affects the spread you see. A "Market Maker" broker sets its own bid and ask prices and often offers fixed spreads. An "ECN" (Electronic Communication Network) broker passes through raw spreads from a network of providers. These ECN spreads can be tighter but usually come with a separate fee per trade. Knowing your broker's model is key to understanding your true trading cost.

  　　

Conclusion: A Strategic Foundation

　　The path to understanding the bid price in forex takes you from a simple definition to the core of strategic trading. It is much more than just a number on your screen.

　　We have learned that the bid price is the price at which you sell. It works with the ask price to create the spread, your basic cost of trading.

　　Most importantly, we have seen that the bid price is the specific trigger for your exit orders on any long position. It decides where your stop loss hits and where your take profit succeeds.

　　A professional trader doesn't just know these facts. They use this knowledge actively. They choose to trade liquid pairs during busy market hours to cut spread costs. They set their stop losses and take profits with full awareness of which price—bid or ask—will trigger them.

　　By truly understanding the bid price forex and its role, you have moved beyond a simple definition. You have taken a key step toward trading with greater precision, awareness, and control over your results.