CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 77% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

The Bid and Ask Price in Practice Trading Basics

Forex Educational Video Series

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.

Disclaimer: This written/visual material is comprised of personal opinions and ideas. The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability for any loss arising from any investment based on the same.

Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.

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