BID ASK PRICES AND ORDER TYPES IN FOREX ~ forex trading education uk
You’ve probably heard or read about bid and ask or bid and offer. What are those? Price quotes for a currency pair are double, one for buying and the other for selling. The difference between the two prices is called the spread, which will be discussed later on. As a side note, the opposite is meant when using the same word in a news release. For example, when there is a considerable number of pend- ing orders awaiting for the price to reach a lower value to buy, it is said that there are many bids on the market, but when sellers have pending orders at a certain
price higher, it is said that there are many offers sitting at that price.
This happens because the bid price is actually the end-value price of a long position, which is purchased at the ask price to allow for the spread to be paid. The same occurs in the inverse situation; the end-value price of a short position is the actual offer price, and it is purchased at the bid price, so the spread is paid at the moment the particular position is closed.
OPENING A POSITION The reason for
Read moreprice higher, it is said that there are many offers sitting at that price.
This happens because the bid price is actually the end-value price of a long position, which is purchased at the ask price to allow for the spread to be paid. The same occurs in the inverse situation; the end-value price of a short position is the actual offer price, and it is purchased at the bid price, so the spread is paid at the moment the particular position is closed.
OPENING A POSITION The reason for
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