Bid Price
Trading MechanicsThe price at which the market (or broker) is willing to buy a currency pair from you. You sell at the bid price.
What Is the Bid Price?
The bid price is the price at which you can sell a Currency Pair. It is always the lower of the two prices quoted. When you see EUR/USD quoted as 1.0850/1.0852, the bid is 1.0850. When you click "Sell" on your platform, your order is filled at or near the bid price.
Bid Price in Trading
You enter every Short position at the bid price. You close every Long position at the bid price. Your trading platform's price chart typically displays the bid price by default. This means that for long trades, the actual entry (ask) is slightly above what the chart shows. The visual difference is equal to the Spread.
Bid Price and Market Depth
In an ECN environment, the bid price reflects the highest price that a buyer in the market is currently willing to pay. Multiple buy orders at different prices create "market depth." The top of the book (the highest bid) is the bid price you see quoted. Higher liquidity means more orders near the current bid, resulting in tighter spreads and less Slippage.
Related Terms
Ask Price
The price at which the market (or broker) is willing to sell a currency pair to you. You buy at the ask price. Also called the offer price.
Bid-Ask Spread
The difference between the bid price and the ask price. The bid-ask spread is the transaction cost of executing a round-trip trade.
Spread
The difference between the bid (sell) price and the ask (buy) price of a currency pair. The spread is the primary cost of making a trade.
Exchange Rate
The price of one currency expressed in terms of another currency. EUR/USD at 1.0850 means 1 euro equals 1.0850 US dollars.