Bid Price and Ask Price
Bid price and Ask price are the two prices on which foreign currencies are traded. Bid price is the price that a buyer is willing to pay for a currency. It represents how much of the quoted currency will be obtained when selling one unit of the base currency.
Opposite of bid price is ask price. Ask price is the price that a seller is ready to accept for a currency. It is also known as offer price. It represents how much of the quoted currency has to be paid when buying one unit of the base currency.
A point to remember: The ask price is always greater than the bid price.
Example: AUD/USD = 0.8139/0.8190
Look at the above example. Buying the above currency pair means that you are buying the base currency. Hence, you need 0.8190 US dollars to buy one Australian dollar. Selling the above currency pair means you are selling the base currency. Hence, you will get 0.8139 US dollars for selling one Australian dollar. In the above example, 0.8139 is the bid price and 0.8190 is the ask price. You can see that the bid price is smaller than the ask price.
|