Resolved Question
Wht is the difrnce btwn bid and ask and how do we intend to mke our long and short decisions basd on them?
about 1 year ago
Best Answer - Chosen by Voters
Bid is the price you can sell (short) that currency for and ask is the price you can buy (long) it for. You don't make your decision of opening a position based on bid/ask. You must analyze the currency either by a fundamental or technical approach. I suggest you go to baby pips and learn about forex there, it's the best place to start your learning curve.
about 1 year ago
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Answers (1)
The bid / ask difference is called a spread. Essentially this is enforced by the retail brokers, instead of charging a commission they profit from the difference. For example when you buy a position for 1. 0000 the ask will be 0. 9998. Now if you want to sell at 1. 0005, your position will remain open until the ask hits 1. 0005. So from 0. 0098 to 1. 0005 is 7 pips not 5. The 2 pips is kept by your broker and the 5 pips is credited to you. If you have traded live, you might notice that when you open a position its slightly in loss, this is because of the spread. As an experienced trader i find that the spread is almost a non issue. As long as the trade is profitable, i dont notice the spread at all.
about 1 year ago
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