BID AND ASK BASICS📚
🔴In all markets, there is a price at which a market participant is willing to buy an asset and a price that suits the seller. At the same time, traders intend to carry out a purchase and sale transaction only within the amount that is profitable for them.
⚠️In the foreign exchange market, the ask line is the cost of buying an asset or the price that is set by the broker in the Buy order.
⚠️Bid - accordingly, the cost at which the broker opens a sell order when accepting an application for the sale of currency from a trader.
❗️The spread is the difference between ask and bid prices. To be more precise, the spread is the difference between the best bid and ask offers for a specific asset over a certain period. Thus, the spread is dynamic, changing over time. The spread value is formed by the initial value set by the broker, as well as due to the volatility of the currency. The spread can vary from 0.1 to 100 points.
✅In the market of physical goods, a similar example can be given: a seller and a buyer, haggling, narrow the difference between prices that satisfy them, bringing them to one at which they make a deal.
✅In the foreign exchange market, the spread between prices is the commission charged by the broker. It should be borne in mind that the broker takes a commission regardless of the volume of the transaction and its result.
