Forex Bid and Ask

When you trade the forex market, your forex broker is going to give you two important numbers: the bid rate and the ask rate. Both of these rates are very important in making trading decisions and estimating how good the broker is.

The ask price is how much the broker is asking to "buy" a pair of currencies. The bid price is how much the broker is bidding to buy back a pair of currencies (in other words, it's your selling price). Since the broker wants to profit, the ask price is always higher than the bid price. The broker buys (bids) low and sells (asks) high.

The difference between the bid and ask price is the spread, and this is where a good broker is measured. A good broker will give you a good spread of 2-3 spreads on the major currencies. More exotic currencies will probably suffer from high spreads, sometimes even 10 pips or more.

Also, when you get yourself or develop a good forex trading system, make sure it can handle the bid-ask spread, otherwise, you set yourself to losses.

Good luck with your trades,
Nadav

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