How to: Bid/Ask Spread
By Finance Mansion
posted 14:11 11/14/10
| Forex Hedging
 
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All Foreign exchange quotes include bid and ask (two-way price). Normally, the value of the bid is lower than the value of ask.

Bid refers to the value at which the trader wants to sell the currency to the dealer who is ready to purchase the base in trade for the quote.

Ask refers to the value at which the dealer is ready to sell the base to the trader in trade for the quote. In short, bid is the selling price and ask is the buying price (in trader’s terms).

Spreads refers to the difference in value of bid and ask prices.
 

 

In the figure above you can see that the left column shows the currency pair and then you have the bid and ask prices. The spread is the difference between these two prices.

 
 
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