Open MT4, MT5 or any Forex platform and every currency pair shows two prices at once. So what are bid and ask, why do the buy price and the sell price differ, and how does that gap affect the cost of every order you place?
- Bid: the price you can sell into the market.
- Ask: the price you pay when you buy from the market.
- Spread: the gap between Ask and Bid.
This is also why a Forex position almost always opens with a small loss showing immediately. This guide from Backcom.io explains bid and ask, how they create the spread, and how to cut that cost.
What Is the Bid Price? How to Read Bid in Forex
Bid Price Definition
The Bid price is what the market or your broker is willing to pay to take a currency pair off your hands. From the trader’s side, Bid is the SELL price.
Say EUR/USD is quoted Bid 1.08520 / Ask 1.08532. Place a SELL order on EUR/USD and it opens at the Bid, 1.08520.
Bid = the trader’s selling price.
When Do You Meet the Bid Price?
- Opening a SELL: you expect EUR/USD to fall, hit Sell, and the position fills at the current Bid.
- Closing a BUY: holding a Buy position means you must sell it back to exit — so a Buy closes at the Bid.
This explains a situation that confuses almost every new trader: price on the chart looks like it touched Take Profit or Stop Loss, yet the order is still open. The reason is usually that the chart is showing only one of the two prices — covered in detail below.
What Is the Ask Price? How to Read Ask in Forex
Ask Price Definition
The Ask price — sometimes called the Offer price — is what the market or broker is willing to sell a currency pair to you for. From the trader’s side, Ask is the BUY price.
Ask = the trader’s buying price.
With the same quote of Bid 1.08520 / Ask 1.08532: hit BUY on EUR/USD and the position opens at 1.08532, not 1.08520. Under normal conditions the Ask is always higher than the Bid, and the distance between them is the spread.
When Do You Meet the Ask Price?
- Opening a BUY: buying EUR/USD, GBP/USD, XAU/USD or anything else fills at the Ask.
- Closing a SELL: a Sell was opened by selling at the Bid, so closing it means buying back — and that trade executes at the Ask.
Bid and Ask: Which Price Applies to Which Order?
This is the single most important rule to take away. The table includes Take Profit and Stop Loss — the two places new traders get caught out most:
| Action | Price used | Note |
|---|---|---|
| Open BUY | Ask | You pay the higher price |
| Close BUY | Bid | Including when TP/SL triggers |
| Open SELL | Bid | You receive the lower price |
| Close SELL | Ask | Including when TP/SL triggers |
| TP/SL on a BUY | Bid | Measured against the Bid line |
| TP/SL on a SELL | Ask | Measured against the Ask line, usually hidden |
Why Does the MT4/MT5 Chart Show Only One Price?
By default, candles on MT4 and MT5 are drawn from the Bid price. The Ask line is hidden. That is why a SELL position can look like it hit Stop Loss on the chart when it has not — the SL on a SELL is measured against the Ask, the price you cannot see.
To display both prices:
- Right-click the chart and choose Properties (or press F8).
- Open the Common tab.
- Tick Show Ask line and click OK.
Once enabled, the gap between the two horizontal lines is your live spread — you can watch it stretch and contract as the market moves. If the two platforms are new to you, see the differences between MT4 and MT5.
Bid and Ask on Pending Orders
Pending orders are where new traders misplace entries most often. The bid and ask rule does not change — buy orders trigger on the Ask, sell orders on the Bid — but because you type the price in manually, it is easy to reference the wrong line:
- Buy Limit and Buy Stop: trigger when the Ask reaches your level.
- Sell Limit and Sell Stop: trigger when the Bid reaches your level.
The consequence is very concrete: you place a Buy Limit exactly on a support level you can see on the chart, the Bid touches it and bounces, but nothing fills. The Ask was still above that support by exactly the spread. On a pair with a 1.2 pip spread, your pending order effectively sits 1.2 pips away from where the chart says it is.
Fix: place buy pendings one spread below the chart level, and sell pendings one spread above resistance.
Reading Bid and Ask in Market Watch
The Market Watch window in MT4/MT5 shows only Bid and Ask columns by default. Right-click inside it and select Spread to add a third column showing the gap in points — the fastest way to compare cost across instruments before you commit to an order.
Turn it on and compare EUR/USD, XAU/USD and an exotic pair at the same moment: the bid and ask gap can differ by tens of times. It is the clearest visual proof that liquidity drives cost.
To judge a broker properly, log that Spread column at four different moments — the Asian session, London, the London–New York overlap, and the instant a major figure prints. The average of those readings is your real cost. Comparing it against the number in the advertising is usually more revealing than any review.
When Bid and Ask Move While You Click
There is always a delay between pressing the button and the broker filling your order. If Bid and Ask shift in that window, two things can happen: slippage — the order still fills but at a different price — or a requote, where the broker returns a fresh quote and asks whether you accept.
Both are far more common exactly when the bid and ask gap is stretching: the seconds around a news release, the market open, or thin liquidity. This is the real reason many traders believe a broker is “manipulating price”, when the cause sits in the two-way quoting mechanism.
Bid and Ask on Gold, Indices and CFDs
The bid and ask principle is identical across every instrument, but converting it into money is not:
- Forex: measured in pips — 1 pip is normally 0.0001, or 0.01 on JPY pairs.
- XAU/USD: measured directly in USD per ounce, multiplied by contract size.
- Indices and CFDs: measured in points or ticks — check Tick Size and Tick Value in the Specification panel. See what CFD trading is for the full breakdown.
The same figure “0.20” can mean 2 pips on EUR/USD but 20 USD per lot on gold. Always open the contract specification and check the tick value before estimating what a trade will cost you.
How Bid and Ask Create the Spread
Bid, Ask and Spread are not three separate ideas. The spread is formed directly by the distance between the Ask and the Bid.
The Formula: Ask − Bid
Spread = Ask − Bid
For most pairs such as EUR/USD, GBP/USD or AUD/USD: 1 pip = 0.0001 and 10 pipettes = 1 pip. The bid and ask concept is not unique to Forex — the US Securities and Exchange Commission defines the bid-ask spread as the difference between the highest price a buyer will pay and the lowest a seller will accept.
A Worked Example on EUR/USD
Suppose EUR/USD shows Bid 1.10000 / Ask 1.10012, a spread of 1.2 pips. You open a BUY of 1 lot at the Ask, 1.10012. Immediately afterwards, if the market has not moved at all, the position can only be closed at the Bid, 1.10000:
1.10012 − 1.10000 = 1.2 pips → 1.2 × 10 USD = 12 USD
On 0.1 lot the same trade costs roughly 1.2 USD. This is exactly why a freshly opened order already shows a small negative — not a platform bug, and not the broker cheating.
A SELL works the same way in mirror. Open a SELL at the Bid 1.10000 and the position is immediately marked against the Ask 1.10012, so it also starts 1.2 pips down. Whichever direction you take, the bid and ask gap is charged once at entry — you are never billed twice for the same round trip.
What the Spread Means for Your Results
The spread moves your break-even point. The wider it is, the more it costs to open and close, the further price has to travel to get back to flat, and the harder scalpers and day traders are hit.
A trader running 50 lots a month at an average spread cost of 10 USD per lot has already paid around 500 USD — before any market profit or loss. So when you assess a broker, do not stop at leverage and minimum deposit:
Real cost = Spread + Commission + Swap − Rebate
Why the Bid and Ask Gap Changes
- Liquidity and trading session: deeper liquidity means a tighter Bid – Ask. Majors (EUR/USD, GBP/USD, USD/JPY) are always tighter than exotics, and the London–New York overlap is usually the narrowest window of the day.
- News and volatility: CPI, Nonfarm Payrolls, FOMC and rate decisions push Bid and Ask apart within seconds. The FOMC calendar is published a year ahead on the Federal Reserve site, so it is entirely avoidable.
- Instrument, broker and account type: majors tight, minors wider, exotics considerably wider, gold on its own margin. Very tight spreads usually come with commission; Standard accounts charge none but quote wider.
Liquidity is the root of all of it: according to the Bank for International Settlements survey, global OTC foreign exchange turnover runs into trillions of dollars a day but is overwhelmingly concentrated in a handful of pairs. The CFTC also notes that retail OTC Forex behaves differently from exchange-listed products.
Fixed vs Variable Spread — The Short Version
- Fixed: the broker holds a roughly constant level (EUR/USD around 1.5 pips). Easy to budget, but the base level is higher and exception clauses still apply in extreme volatility.
- Variable: moves continuously — EUR/USD might sit at 0.5–0.8 pips in deep liquidity, around 1 pip normally, and several pips on news. This is the common model today.
Never assume “fixed” means the spread never changes — read each account’s terms. The full analysis of both models, spread widening and how to compare brokers is in our guide to what forex spread is.
3 Ways to Cut the Cost of the Bid and Ask Gap
1. Trade When Liquidity Is Deep
Favour the hours when London and New York are both active. Be careful around rollover, weekends, the start of the week, and the minutes either side of major economic releases. For scalping, an extra 1–2 pips of spread is enough to flip a strategy from profitable to not.
2. Compare Total Cost, Not Just the Spread
The most common mistake is picking an account advertised at “spread from 0 pips” while ignoring commission. For example:
- Account A: 1 pip spread, no commission.
- Account B: 0.2 pip spread but round-turn commission.
B is not automatically cheaper — you have to convert everything to USD per lot to compare properly. Check real fee structures in Exness trading fees and XM account types, or see the top low-spread Forex brokers.
3. Add a Rebate on Top
For anyone trading regularly, a Forex rebate returns part of the cost you have already paid. The mechanism has four steps: open or link an account through an IB partner → trade as usual → the broker records your volume → part of the IB commission is paid back to you.
Backcom Forex works exactly this way. To turn a rebate rate into a real number, see what a Forex rebate is and how it is calculated per lot, and compare rates across brokers in the rebate comparison table.
Note: A rebate only reduces part of your trading cost. It does not reduce market risk and does not guarantee a profit.
Conclusion
Understanding bid and ask is groundwork you need before placing a live Forex order. Three lines to remember:
- Bid = the trader’s SELL price — and the price a BUY closes at.
- Ask = the trader’s BUY price — and the price a SELL closes at.
- Spread = Ask − Bid, and it is charged the moment your order fills.
Nearly every “the platform is wrong” moment in a beginner trading journal traces back to this one mechanism.
Once that clicks, a position opening slightly negative stops being a mystery, and so does a chart that looks like it hit your Stop Loss without closing the trade. The next step is controlling the number: pick your hours, compare total cost rather than advertised spread, and use a rebate if you trade often.
Frequently Asked Questions
What Do Bid and Ask Mean?
Bid is the price you can sell at, Ask is the price you must pay to buy, quoted at the same moment on the same instrument. The gap between them is the spread.
Is Bid or Ask Higher?
Under normal conditions the Ask is always higher. If the two are equal the spread is zero — rare, and usually only momentary on Raw/ECN accounts that charge a separate commission.
Does a Buy Order Fill at Bid or Ask?
A Buy opens at the Ask and closes at the Bid. A Sell is the mirror image: opens at the Bid, closes at the Ask.
Why Is My Position Negative the Moment It Opens?
Because you open at one price and are immediately revalued at the opposite one. A BUY fills at the Ask but is marked to the Bid, so the initial negative is exactly the spread — not a system error.
Why Did the Chart Hit My SL but the Trade Stayed Open?
MT4/MT5 charts are drawn from the Bid by default, while a SELL order’s Stop Loss is measured against the Ask — the hidden line. Turn on Show Ask line in Properties (F8) and the real distance becomes visible.
Why Didn’t My Pending Order Trigger?
Because a buy pending triggers on the Ask while the chart is drawn from the Bid. When the Bid reaches your level, the Ask is still one spread above it, so the order does not qualify yet. Place buy pendings one spread below the chart level.
Do Bid and Ask Exist Outside Forex?
Yes. Shares, futures, options and crypto all quote two prices. What changes is how the gap forms: on an exchange it comes from the order book, while retail Forex quotes are supplied by the broker and may include a markup. The trading rule stays identical — you buy at the Ask and sell at the Bid.
Is a Tighter Spread Always Better?
Not necessarily. A tight spread paired with high commission, slow execution or frequent slippage can still cost more overall. Always compare Spread + Commission + Swap converted to USD per lot.
