What Are Bid and Ask Prices?

When you look at a tradable instrument, you will commonly see two prices.

These are called the bid and the ask.

Understanding them is essential because they determine the prices at which a trader can generally buy or sell.

The bid is generally the price available when selling.

For example:

EUR/USD Bid: 1.1500

A trader selling at that moment would normally execute around the available bid price, subject to execution conditions.

The ask, sometimes called the offer price, is generally the price available when buying.

For example:

EUR/USD Ask: 1.1502

A trader buying would normally transact around the available ask price, subject to execution conditions.

So if the quotation is:

Bid: 1.1500

Ask: 1.1502

there is a small difference between the buying and selling prices.

That difference is known as the spread.

Financial markets involve participants willing to buy at particular prices and others willing to sell at particular prices.

These available prices do not always match exactly.

The difference reflects market conditions and available liquidity.

Imagine gold is quoted:

Bid: $3,000.00

Ask: $3,000.30

A trader buying would generally deal around the ask price.

A trader selling would generally deal around the bid price.

This is why a newly opened position may initially show a small negative amount before the underlying price moves.

Yes.

Both prices can move continuously as:

During highly active market conditions, prices can change extremely quickly.