Bid, Ask and the Spread
Every single price quote you encounter on your MetaTrader 5 platform actually displays two distinct prices simultaneously rather than just one, and understanding the relationship between these two figures - known as the bid and the ask - along with the spread that sits between them, is absolutely fundamental to trading Forex and CFDs successfully.
This lesson breaks down exactly what the bid price represents, what the ask price represents, and why the gap between them constitutes a real, unavoidable cost embedded into virtually every trade you'll ever place. Building genuine fluency with these concepts early will make comparing brokers, evaluating trading costs and reading any live quote considerably more intuitive going forward.
The Bid Price
The bid price is what the market is currently willing to buy a pair from you, meaning it's the price at which you'd sell to close a long or open a new short.
It sits on the lower side of every quote and updates constantly, and it's the bid price that determines exactly where a closed long or new short executes.
- Selling Price: The bid price is what the market pays you when you close a long position or open a brand new short position.
- Always the Lower Side: The bid price always sits on the lower side of every quoted spread, below the corresponding ask price.
- Real-Time Updates: The bid price changes continuously throughout the trading day as broader supply and demand conditions shift.
- Relevant for Exits: Closing an existing long position always executes at the current bid price shown on your platform.
The Ask Price
The ask price is what the market charges to sell a pair to you, meaning it's the price you pay to open a long or close an existing short.
It always sits on the higher side of the spread, reflecting what sellers are willing to accept, and every long position opens at this price.
- Buying Price: The ask price is what you pay the market in order to open a brand new long position on any given currency pair.
- Always the Higher Side: The ask price always sits above the corresponding bid price on every single live quote you'll ever see.
- Reflects Selling Interest: The ask price represents what sellers in the market are collectively willing to accept at that exact moment.
- Relevant for Entries: Every new long position you open executes specifically at the current ask price shown on your platform.
Why the Spread Matters
The spread, the gap between bid and ask, is a basic unavoidable cost on every trade - price must move slightly in your favor just to cover it.
Spreads vary between pairs and throughout the day, often widening overnight or around major news, so knowing typical behavior matters before you trade.
- The Bid Price: The bid price is what the market pays you the moment you choose to sell or close an existing long position.
- The Ask Price: The ask price is what the market charges you the moment you choose to buy or open a new long position.
- The Spread: The spread is the gap between the bid and ask price, representing a real, unavoidable cost built into every single trade.
- Comparing Spreads: Consistently tighter spreads on major currency pairs generally translate into meaningfully lower overall trading costs over time.
