Bid and Ask Price Forex: Complete 2025 Trader's Guide & Strategies

Understanding the two prices in a forex quote is the first real step to thinking like a professional trader. It's the basic idea that sets apart those who just watch from those who take part in the world's biggest money market.

　　At its core, the answer is simple. The bid price is the price at which a broker will buy a currency from you. This means it is the price at which you sell.

　　The ask price is the price at which a broker will sell a currency to you. This means it is the price at which you buy.

　　The difference between these two prices is called the spread. This spread is the cost you can't avoid when you make a trade, and knowing how to handle it is key.

　　This guide will take you from these basic ideas to the smart moves used by top traders to work with bid and ask prices.

　　

The Two Forex Pillars

　　To build a solid trading base, we must first understand the two main parts of every forex quote: the bid and the ask. These prices, and the gap between them, set the terms for all your trades.

　　

The Bid Price

　　The bid price shows the demand for a currency. It is the price the market is "bidding" to buy the base currency from you.

　　As a trader, the rule is clear and simple: you always sell the base currency at the bid price. It will always be the lower of the two prices shown in a quote.

　　

The Ask Price

　　The ask price shows the supply of a currency. It is the price the market is "asking" for when you want to buy the base currency.

　　The rule for traders is just as simple: you always buy the base currency at the ask price. This will always be the higher of the two prices.

　　Think of it like a money exchange booth at an airport. They have a "We Buy" price for your dollars and a "We Sell" price. Their "We Sell" price is always higher than their "We Buy" price, which is how they make money. Forex brokers work the same way.

　　

The Spread

　　The spread is the gap between the ask price and the bid price. You can find it by doing Ask Price - Bid Price.

　　This small gap is the main way many brokers, especially market makers, earn their money. It is the hidden cost in every trade you make.

Concept	What it means for YOU (the Trader)	Price Relationship	Analogy
Bid Price	The price you receive when you SELL the base currency.	The lower price	The "We Buy" price at a currency exchange.
Ask Price	The price you pay when you BUY the base currency.	The higher price	The "We Sell" price at a currency exchange.
Spread	The cost of opening the trade, paid to the broker.	The difference	The broker's service fee.

　　

Reading a Forex Quote

　　Theory is one thing; using it is another. Let's turn this knowledge into a skill you can use when looking at your trading screen. Knowing how to read a quote in real-time helps you act with trust in yourself.

　　

Deconstructing a Quote

　　Imagine you see this quote on your screen for the Euro versus the US Dollar: EUR/USD 1.0850/1.0852.

　　The first currency, EUR, is the base currency. This is what you are buying or selling.

　　The second currency, USD, is the quote currency. This is the money you use for the trade.

　　The first number, 1.0850, is the bid price. This means to sell 1 EUR, you will get 1.0850 USD.

　　The second number, 1.0852, is the ask price. This means to buy 1 EUR, you must pay 1.0852 USD.

　　

Calculating the Spread

　　The spread is measured in "pips," which stands for Price Interest Point. It's the smallest unit of price movement in the forex market.

　　To find the spread, just subtract the bid from the ask.

　　Using our example: 1.0852 (Ask) - 1.0850 (Bid) = 0.0002.

　　For most major currency pairs shown to four decimal places, this 0.0002 gap is 2 pips. This 2-pip spread is your direct cost for making this trade.

　　Here is the simple, three-step process to use every time:

• Step 1: Find the Bid (the first, lower number).
• Step 2: Find the Ask (the second, higher number).
• Step 3: Subtract the Bid from the Ask to find the spread in pips.

　　

A Trader's Walkthrough

　　Let's move from fixed examples to a live, story-based guide. This shows the thought process and steps of making a real trade, showing how bid and ask prices affect your position from start to finish.

　　

The Scenario

　　Let's say you've done your market study. You think the British Pound (GBP) will get stronger against the US Dollar (USD). You want to buy this pair.

　　The quote on your trading screen reads: GBP/USD 1.2510/1.2512.

　　

Step 1: Entering the Trade

　　You want to buy the base currency, GBP, hoping its price will rise.

　　To do this, you must trade at the current ask price. You click "buy."

　　Your buy order for one standard lot is filled at 1.2512. Your position is now open.

　　

Step 2: The Spread's Impact

　　The moment your trade is live, a key fact hits new traders. While you bought at 1.2512, the price you could sell at right now is the bid price, which is 1.2510.

　　This means your trade is showing a small loss of 2 pips right away.

　　This is a vital point: the market must move in your favor by the full amount of the spread just for your trade to reach break-even. This cost is paid each time you trade.

　　

Step 3: Exiting for a Profit

　　Some time passes, and you were right. The GBP/USD pair goes up.

　　The new quote on your screen is GBP/USD 1.2560/1.2562.

　　You decide it's time to close your trade and take your profit. To close a buy position, you need to sell. So, you must exit at the current bid price.

　　You make a sell order, and your position closes at 1.2560.

　　

Step 4: Calculating Your Profit

　　The math for your profit is easy. You subtract your entry price from your exit price.

• Exit Price (Bid): 1.2560
• Entry Price (Ask): 1.2512
• Difference: 1.2560 - 1.2512 = 0.0048

　　This gap of 0.0048 means a profit of 48 pips.

　　For a standard lot, where each pip is worth about $10, this trade would give you a profit of $480 (48 pips * $10/pip). This shows how the bid is your exit point for a buy trade, just as the ask was your entry point.

　　

Factors Influencing Spreads

　　The bid-ask spread is not fixed. It changes based on market conditions. Understanding why this happens is a high-level skill that can protect your money.

　　

Currency Pair Liquidity

　　Liquidity, or how much trading happens in a currency pair, is the biggest factor affecting the spread.

　　Pairs with very high trading volume, known as the "majors," have lots of liquidity. This means there are always many buyers and sellers, leading to tight spreads.

　　For example, typical spreads for major pairs like EUR/USD or USD/JPY are often less than 1-2 pips during busy market hours.

　　On the other hand, "exotic" pairs like USD/ZAR (US Dollar/South African Rand) have much less trading. This lower liquidity means it's harder for brokers to match buyers and sellers, so they widen the spread to cover their risk. Spreads on these pairs can easily be 50 pips or more.

　　

Volatility and News

　　Market ups and downs have a direct impact on spreads. During big economic news, such as the US jobs report or a central bank rate decision, uncertainty goes way up.

　　At these times, liquidity can briefly dry up as big players step back from the market. To handle the risk of fast price changes, brokers will widen their spreads.

　　A tip for all traders is to be very careful when trading just before or after big news. The wider spreads can quickly eat into any profits.

　　

Time of Day

　　The forex market runs 24 hours a day, but it's not equally busy all the time. Spreads change with this activity.

　　Spreads are usually tightest during the London-New York overlap (about 8 AM to 12 PM EST). This is when two of the world's biggest financial hubs are active, creating the highest trading volume of the day.

　　In contrast, spreads tend to widen during quieter times. This is especially true during the "rollover" around 5 PM EST when one trading day ends and another begins, or during the Asian session for non-Asian pairs like EUR/GBP.

　　

Broker Models and Spreads

　　Not all spreads are the same, because not all brokers work the same way. Understanding the different broker business models gives you insight into where your quotes come from and helps you pick one that fits your trading style.

　　

Fixed vs. Variable Spreads

　　Brokers typically offer one of two types of spreads.

　　Fixed spreads don't change regardless of market conditions. They are often offered by "Market Maker" brokers. The main plus is that you always know your trading cost upfront. However, they are often wider than the other type.

　　Variable, or floating, spreads change all the time with market supply and demand. These are offered by ECN/STP brokers. They can be very tight, sometimes near-zero for major pairs in good conditions. The downside is that they will widen a lot during volatile news events. Quick traders and computer traders often prefer this model for its chance of lower entry costs.

　　

Understanding Broker Types

　　The type of spread a broker offers is often tied to how they do business.

　　A Market Maker broker basically creates the "market" for its clients. They take the opposite side of your trade. Their main profit comes from the bid-ask spread.

　　An ECN/STP (Electronic Communication Network/Straight Through Processing) broker acts as a bridge. They send your order directly to the bank market, where big banks are competing. Because they don't take the opposite side of your trade, their model is often seen as more open. They make money by charging a small, fixed fee per trade plus passing on the raw market spread.

　　

A Word on Slippage

　　Slippage is a related idea. It happens when your trade is done at a different price than the one you asked for on your screen.

　　This occurs in fast-moving markets when the bid or ask price changes in the tiny moment between when you click and when the order reaches the server. It can help or hurt you, but it's a direct result of a quickly changing bid-ask spread.

　　

Actionable Strategies

　　Knowledge is only powerful when you use it. Here is a list of useful strategies you can use to work with the bid-ask spread, lower your costs, and improve your trading results.

• 　　Tip 1: Match Your Broker to Your Strategy. Your trading style should guide your choice. If you make many quick trades, a true ECN broker with raw variable spreads and low fees is likely the most cost-effective. If you hold trades for days or weeks, a slightly wider but stable fixed spread from a good market maker might be fine.

• 　　Tip 2: Factor the Spread into Your Targets. Your stop-loss and take-profit levels must account for the spread. If you want to exit a buy trade at 1.1000, remember you'll be exiting at the bid price. The ask price on your chart might need to reach 1.1001 or 1.1002 (depending on the spread) for your take-profit at the bid to be triggered.

• 　　Tip 3: Respect Quiet Times and Rare Pairs. Know that the cost of trading is higher for exotic pairs and during major news events or off-peak hours. If your strategy needs tight spreads, avoid these conditions or adjust your profit goals.

• 　　Tip 4: Compare Typical Spreads. When picking a broker, look beyond the "spreads as low as..." ads. Find their info on typical or average spreads for the currency pairs you trade most often during your trading hours. This gives a much more real picture of your actual costs.

  　　

　　

Mastering the Bid and Ask

　　You have now moved beyond a simple definition. The forex bid and ask price is not just two numbers on a screen; it is the gateway to every trade and the basic cost of doing business in the money markets.

　　By learning the core rules—you always BUY at the higher Ask price and SELL at the lower Bid price—you have laid the foundation of your trading education.

　　By understanding the spread, what affects it, and how your broker's model changes it, you have grown from a beginner to a smart trader. You are now ready to make wiser, more cost-effective choices on your path to mastering the forex market.