Forex glossary
bid and ask (bid-ask prices)
Bid is the price available to sell and ask the price available to buy, from the client's perspective. Their difference is the spread, not necessarily the broker's entire revenue. Standard retail FX longs close at bid and shorts at ask.
Illustrative example
How does it work in practice?
Suppose EUR/USD has a bid of 1.1000 and an ask of 1.1002 USD per EUR. Buying 1,000 EUR at ask and immediately selling at the unchanged bid produces a 0.20 USD price loss, before other costs.
Why do buying and selling use different prices?
Two prices and two position directions
EUR/USD model: bid 1.1000 and ask 1.1002 USD per EUR; one pip is 0.0001. No commission, financing or slippage.
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| Term | What it describes | Shared example |
|---|---|---|
| bid and ask (bid-ask prices) | The client sells at bid and buys at ask. | Buying 1,000 EUR costs 1,100.20 USD; selling it receives 1,100 USD. |
| spread (bid-ask spread) | Ask minus bid, rather than a separate amount to deduct again. | 1.1002 − 1.1000 = 0.0002, or two pips. |
| Long position (bullish position) | Buying opens a long; selling closes it. | Immediately closing 1,000 EUR at unchanged quotes gives −0.20 USD. |
| Short position | Selling opens a short; buying it back closes it. | Selling 1,000 EUR at bid and repurchasing at unchanged ask gives −0.20 USD. |
Takeaway: Direction determines the order of buying and selling. P/L calculated from the correct fills already reflects the bid–ask difference.
Change an assumption, see the result
What changes if…?
Change Bid and Ask. Compare an immediate open and close for a long and a short at unchanged quotes; both outcomes use the correct quote sides.
EUR/USD model: 1 pip = 0.0001. Long: buy at Ask, close at Bid; short reverses the sides. Quotes stay unchanged between entry and exit. No slippage, commissions or swap.
Check your understanding
Select the correct quote side for a purchase or sale.
Show the answer and explanation
Ask 1.1002.
Opening a long is a purchase, so it uses ask. Bid is the selling side, including when the long is later closed.
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Related terms
Sources and documentation
- MetaTrader 5: basic trading principles
Orders, deals and positions; FOK, IOC and partial-filling policies.
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