Lesson A2 · Part A: Foundations2 of 105 min
Bid, ask and the spread
Why there are always two prices, and how the gap between them is the first cost of every trade.
§1Two prices, always
A broker quotes a bid (the price you can sell at) and an ask (the price you can buy at). The ask is always a little higher.
The difference is the spread. It's how many brokers are paid, and it means every trade starts slightly in the red.
§2When spreads widen
Spreads are tightest when markets are busy — the London and New York overlap — and widest in quiet hours, around major news, and on exotic pairs.
A strategy that looks profitable on a chart can fail purely on spread costs if it trades very often or very briefly.
01Bid 1.08500 · Ask 1.08512
02Spread = 1.08512 − 1.08500 = 0.00012
03= 1.2 pips
remember this:
- Sell at the bid, buy at the ask.
- The spread is a cost you pay on every trade.
- Busy sessions mean tighter spreads; news and quiet hours mean wider ones.
Checkpoint
Q1.You want to buy GBP/USD. Which price do you get?
Q2.When are spreads usually widest?