When trader wants to open a deal at Forex market he/she should know the currency pair as well as the price of this pair. At Forex market the price of the currency pair is denoted by two symbols Ask and Bid, which has the specific digital notations.
Ask-price is the highest price in the pair’s quotation; for this price the trader buys the currency, which is the first in the abbreviation of the currency pair. In this case, trader sells the currency, which is the second in the abbreviation.
Bid-price is the lowest price in the quotation of the currency pair; for this price the trader sells the currency, which is the first in the abbreviation of the currency pair. Respectively, trader buys the currency, which is the second in the abbreviation.
Let’s consider an example:
We have the currency pair EUR/USD with the quotation 1.3652/1.3655. This means that you can buy 1 euro for 1.3655 dollars or to sell 1 euro for 1.3652 dollars. The difference between Bid price and Ask price is called spread. Spread is a payment for the opportunity to trade at Forex market, so called commission of the brokerage firm. Spreads are very small at exchange market; they are ten or even hundred times smaller than the banks spread. For the most part of the major group, spreads amount to 3 points.
