Definition
Bid PriceThe bid price is the price at which the market will buy a currency pair from you, so it is the price you receive when you sell or close a long trade.
Example
Assume USD/JPY is quoted at 151.20/151.23. A sell order fills at the bid of 151.20, and a trader who bought earlier closes that long position at 151.20 too.
In detail
The bid is the lower number in a two-way forex quote. It shows the best price a buyer in the market is currently prepared to pay for one unit of the base currency, expressed in the quote currency. When you click "Sell" you hit the bid, and when you close a long position you also exit at the bid.
Most retail charting platforms draw candles using bid prices by default. That is useful to know: the chart shows where sellers get filled, not where buyers get filled.
Why it matters
Your profit on a long trade is measured from the ask price you paid to the bid price you receive. That means the bid needs to rise by at least the size of the spread before a new long trade breaks even.
For short sellers, the bid is the entry price. A short trade makes money when the ask (the price needed to buy back) falls below the original bid.
Example
Assume EUR/GBP is quoted at 0.8570/0.8572 (illustrative). You sell 1 standard lot (100,000 EUR) at the bid of 0.8570. Later the quote is 0.8540/0.8542, and you buy back at the ask of 0.8542.
- Price change: 0.8570 − 0.8542 = 0.0028, or 28 pips
- Profit: 0.0028 × 100,000 = 280 GBP
Notice that the profit uses the ask on exit, not the bid of 0.8540, which would have suggested 30 pips.
Common confusion
Beginners sometimes think the bid is "what I bid to buy." In forex quotes it is the opposite: the bid is the market's bid to buy from you. Remember "you sell at the bid, you buy at the ask" and the two sides fall into place. For a step-by-step walkthrough, see the Bid and Ask Prices lesson.
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Related terms
- Ask PriceThe ask price is the price at which a broker or market maker will sell a currency pair to you, so it is the price you pay when you open a buy trade.
- SpreadThe spread is the difference between the ask (buy) price and the bid (sell) price of a currency pair. It is a built-in cost paid on every trade.
- Quote CurrencyThe quote currency is the second currency in a forex pair. Prices, pip values and profit or loss on that pair are all expressed in it.
- ExecutionExecution is the process of filling a trade order: the price, speed and method by which your buy or sell instruction becomes an open or closed position.