Bid and Ask Price in Forex: What They Mean and Which You Pay

Reading a two-way quote

Forex prices are quoted per unit of the base currency — the first currency in the pair. In GBP/USD, the price tells you how many US dollars one British pound costs.

A GBP/USD quote

GBP/USD 1.2700 / 1.2702

• Bid: 1.2700 — you can sell £1 (the base currency) for $1.2700
• Ask: 1.2702 — you can buy £1 for $1.2702
• Spread: 0.0002 = 2 pips
• Mid price: 1.2701

Bid vs ask in forex

	Bid	Ask (offer)
What it is	The price at which you can sell	The price at which you can buy
Level	Normally the lower price	Normally the higher price
Used to open	Short (sell) positions	Long (buy) positions
Used to close	Long positions	Short positions

A long trade therefore needs the bid to rise above your entry ask price before it is in profit, and a short trade needs the ask to fall below your entry bid. See long and short positions.

A full round trip

EUR/USD is quoted 1.0850 / 1.0852. You buy 1 standard lot at the ask, 1.0852, on a USD account (pip value about $10).

1. Immediately afterwards the quote is unchanged. Closing now means selling at the bid, 1.0850: a loss of 2 pips ($20) — the spread.
2. Later the quote is 1.0880 / 1.0882. You close by selling at the bid, 1.0880.
3. Result: 1.0880 − 1.0852 = 28 pips = $280, even though the bid chart moved 30 pips.

Where bid and ask prices come from

Banks and other liquidity providers quote a bid and an ask at which they are willing to trade. How your broker’s prices are formed depends on its business model:

• Dealing-desk (market-maker) brokers set their own prices and usually act as the counterparty to client trades.
• Agency-style (STP or ECN) brokers pass orders to liquidity providers and show prices derived from their quotes, often adding a markup or charging a commission.

That is why the same pair can show slightly different quotes at different brokers at the same moment.

Bid/ask and pending orders

On MetaTrader and many other platforms, orders are triggered by the side of the quote they would trade at:

Order	Triggered when…
Buy limit, buy stop	the ask reaches the order price
Sell limit, sell stop	the bid reaches the order price
Stop loss / take profit on a long position	the bid reaches the level (the position closes by selling)
Stop loss / take profit on a short position	the ask reaches the level (the position closes by buying)

The trigger price and the fill price are not always the same: stop orders are typically executed as market orders once triggered and can be subject to slippage. See forex order types for how each order works.

Why your chart may not match your fills

Charting platforms, including MetaTrader, often display the bid price by default. Short positions are closed by buying at the ask, so a short position’s stop loss is triggered by the ask — a price the default chart does not show:

A stop loss triggered 'above' the chart

You sell EUR/USD at 1.0850 (bid) with a stop loss at 1.0870. The chart’s highest bid is 1.0868, but during a news release the spread widens to 3 pips, so the ask reaches 1.0871. Your stop is triggered even though the bid chart never touched 1.0870 — and in a fast market the position may be closed at a worse price than the stop level because of slippage.

Many platforms let you show an ask line on the chart. Turning it on shows the price that triggers buy orders and stops on short positions; the actual execution price can still differ because of slippage.

Bid, ask and the spread

The gap between the two prices is the spread, one of the main trading costs. It is usually narrow on heavily traded pairs such as EUR/USD and wider on minor and exotic pairs or when the market is thin.