Between Forex Quotations and Spread

forex-bull-bear.jpgBid price and ask price are typical for any financial product, and forex quotes as well. There is a two-sided quote containing Bid and offer that can be often seen at the forex trading platforms. Bid gives you the information at which price the base currency is sold where in this case you would buy the counter currency. The Ask gives you the purchase price of the base currency when you sell the counter currency.

If you are going to purchase the base currency or long the pair relying on your expectations of its increase, you should perform the purchase at the buy price which always higher than the sell price and you’ll lose the spread difference if you suddenly decide to sell this currency at once.

The trading platform usually will inform you of the purchase or sale price at which you have bought or sold the currency pair. If you have bought the pair, the trade platform will show you both your bought price and the current sell price which can be calculated as the by price subtracting the spread.

The standard spread depends on the currency pair traded. In case the pair is traded much then the spread fluctuations are low. The majors currency pairs spreads are generally very tight while the crosses and exotics ones are much wider. The standard spread for the Majors makes from 2 to 5 pips whereas the spread of Crosses and Exotics reaches from 5 to 20 pips.

 

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