What is Spread, bid price and ask price? Table of Contents
When making a contract for difference, you must pay the difference, which is the difference between the buying and selling prices.
You use the buying price to enter a buying transaction and the selling price to exit.
The narrower the spread, the price does not need to move in your favor before you start to make a profit. We always provide a competitive price difference.
What is Spread?
Spread is the difference between the Bid and Ask prices.
When trading any financial instrument, you are offered two prices; the Bid price and Ask price.
The Bid price is the selling price and the Ask price refers to the price offered for buying.
The difference between the Bid and Ask is called Spread and varies for each financial instrument traded.
The measurement between the two prices is usually referred to as:
- pips [for Forex Currency Pairs].
- cents [for Spot Precious Metals].
- ticks [for Future (OTC): Currencies, Precious Metals, Commodities and CFDs USA].
- points [for Future (OTC): Indices, Energies, CFD Indices and CFD Energies].
An advantage of trading currency pairs at OANDA is the low spreads offered, which is as low as 0.2 pips on majors.
Check out OANDA’s real-time spreads
What is the Ask price?
The Ask price is the best price at which we can buy a financial asset.
It can be defined as the price level at which you can buy a financial instrument.
When operating in financial markets, you are given the ask price (to buy) as well as the bid price (to sell). The ask price is always higher than the bid price, and the difference between them is what we call the spread, which is also the cost of executing a transaction in the market.
For example, if a window on your trading platform quotes the EURUSD market at 1.12027 / 1.12037, this means that the ask price is 1.12037 and the bid price is 1.12027.
The thing to remember when going long is that your trade will open at the ask price and close at the bid price.
On the other hand, if you go short, your trade will open at the bid price and close at the ask price.
Also, you should remember that the price you see on the chart on both the xStation and MT4 trading platforms is the bid price.
Go to OANDA’s Official Website
How can I set the ask price on the xStation?
In order to locate the ask price on the chart, you must first choose the “visible layers” button on the right hand side of the chart, and then select the “Ask” option.
After doing this, the ask price will become visible on the chart.
How can I set the ask price on MT4?
In order to locate the ask price on the chart, you must first press the F8 button on your keyboard.
Doing so will open the chart properties window and you must check the option “Show Ask price line” in the common menu.
After doing this, the ask price will become visible on the chart.
What is the Bid price?
The Bid price is the best price at which we can buy a financial asset.
It is the price you see when we analyze charts on trading platforms.
When operating in financial markets, you are provided with the bid price as well as the ask price.
The bid price is always lower than the ask price, and the difference between the ask price and the bid price is what we call the spread, which is also the cost of executing a transaction in the market.
For example, if a window on your trading platform quotes the OIL market at 42.10 / 42.15, this means that the bid price is 42.10 and the ask price is 42.15.
What you should keep in mind when going long is that your trade will open at the ask price and close at the bid price.
On the other hand, if you go short on the market, your trade will open at the bid price and close at the ask price.
Please click "Introduction of OANDA", if you want to know the details and the company information of OANDA.
IronFX
Comment by Diletta
March 26, 2024
Awesome bonuses, good leverage. A few hiccups, but support rocks!