The Bid And Ask Price In Practice
The Bid Price is the price a forex trader is willing to sell a currency pair for. The Ask Price is the price a trader is willing to buy a currency pair for. The Market Watch window displays the Bid and Ask price in real time for each financial instrument. Additionally, the Bid price is displayed as a horizontal grey line in the Chart Area of the Client Terminal. By adding a check mark next to the ‘Show Ask’ line in the Common tab of the Properties window, a red Ask line will also be displayed in the Chart Area.
Example of Placing a Sell Order
When a trader places a Sell order, the trade will be executed at the Bid Price. Any profit will be calculated at the Ask price. The same is true for Stop Loss. For example, if a trader opens a sell position at 1.17744 with Take Profit at 1.17700 and Stop Loss at 1.17800 then the corresponding Bid/Ask prices apply:
When selling, the ask price has to reach the Take Profit or the Stop Loss price for the position to close. Depending on which price reaches it first, you will either profit or lose.
Example of Placing a Buy Order
Conversely, if a trader decides to place a Buy order, then the trade will be executed at the Ask price. Any profit will be calculated at the Bid price. The same is true for Stop Loss. For example, if a trader opens a buy position at 1.17797 with Take Profit at 1.17848 and Stop Loss at 1.17786, then the corresponding Bid/Ask prices apply:
When buying, the bid price has to reach the Take Profit or the Stop Loss price for the position to close. Depending on which price it reaches first, you will either profit or lose.
Now you know what Bid and Ask price is! Remember to always trade wisely.
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