Forex Bid And Ask Price – How To Buy And Sell Currency Pairs

Forex Bid And Ask Price

Firstly, currency pairs are what traders refer to two currencies being traded against each other. There are two types, major and cross. Major currency pairs, EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, and NZD/USD are often traded in Forex and also used by many traders all over the world. Cross currency pairs are basically any kind of currency that does not have the US dollar.

Traders refer to the base and the counter or quote currency. For example, EUR/USD; EUR is the base currency and USD is the counter currency. In trading, you will be shown the exchange rate, for example EUR/USD = 1.5432. This means that you can buy 1 EUR for a price of 1.5432USD. This principle is congruent with selling pairs. You will gain 1.5432USD if you sell 1 EUR. Forex Bid And Ask Price

Another thing you need to understand in Forex Currency Trading is the bid and ask price. If you looked at the given currency pair, you will see that the EUR is paired with USD. On your trading software, your broker will show this to you as EUR/USD = 1.5432/33. 1.5432 is the bid price and 33 is the ask price. The bid price is what your broker is willing to pay for the pair that you are selling, thus you will earn 1.5432.

The ask price, on the other hand, is the price that your broker will sell and which you need to pay to buy the currency pair. It is often the ask price that is higher than the bid price and the difference is often rather small. The slash that you see between the currency pair is called the spread. The spread represents the cost you need to deal with the broker when buying and selling the pairs. It is also important to know that brokers do not offer the same spread, which is why it is up to you to see who offers the best spread because this is where you can gain your revenues from. Forex Bid And Ask Price