When you check the Market Watch section in your trading app, you’ll notice two prices shown for each asset. One is the Ask Price, and the other is the Bid Price.
The Ask Price is always higher, and the Bid Price is lower.
What is Ask and Bid Price in Trading?
- Ask Price: This is the price at which your broker sells the asset to you. It includes the broker’s charges or markup.
- Bid Price: This is the price your broker is willing to buy the asset from you. It usually comes directly from the liquidity provider.
The difference between the Ask and Bid prices is known as the spread, and it represents the cost of the trade.
Where Are Trades Executed?
- If you open a Buy position, your order will be executed at the Ask Price (the higher price).
- If you open a Sell position, your order will be executed at the Bid Price (the lower price).
Summary
Understanding the Ask and Bid Price in Trading is essential for every trader. It helps you know where your orders are executed and why you see a small difference in price when you enter or exit a trade.
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