Prices BID and ASK Forex market

4. Prices BID and ASK Forex market

As is known, any transaction is made by a well-defined and specific price, while in Table Quote Spread Sheet for each currency coming three prices, for example:

Each of the Forex market participants for each specific transaction serves as a SELLER or a particular currency or the buyer. This seller offers foreign currency more expensive, for example, GBPUSD at 2.0254, and the buyer asks the foreign currency is cheaper, for example, GBPUSD at 2.0250. Accordingly, the offer price the seller is called ASK, and the price the buyer - BID. Therefore, if you suspect that GBPUSD will go up (in your chart GBPUSD curve goes up), then you decide to buy a pound, while it is cheaper in order to sell more expensive. Buy (this is called BUY) can only be from a seller who will offer it at a price ASK. When you're selling a pound (an operation called a sales SELL), the buyer will offer for its price at BID (this is true for all currencies). Hence it obviously follows that if you open a position (the operation is called - OPEN), ie did BUY GBPUSD, and then want to close it (the operation is called CLOSE), ie to sell just bought pounds, you can only do so at a loss, just as it would in any exchange office. So that you have made a profit, the price of currency to take place in the proposed direction you more than the difference between the BID and ASK. The third number is called LAST - the Forex market is the average between the last BID and ASK.

As stated in Section 3 , only the currency on the back of rise in price quotation in moving up the chart. Obviously, the rule is that the operation BUY, profit upwards for some currencies and losses for others, will cause inconvenience. Therefore, when performing BUY for currencies with a direct quotation, not bought myself currency and U.S. dollar, the currency itself sale. For example, BUY USDCHF at 1.1724 buys quote $ 100,000 for 117.240 francs. Thus, the operation BUY always makes a profit while driving the schedule up, and SELL - while driving the schedule down.

In summary, OPEN BUY (up) occurs at the price of ASK, a CLOSE - at the price of BID; OPEN SELL (down) - at the price of BID, and CLOSE - at the price of ASK.

Sometimes the quotes are shown in a couple, for example, 114.88/92. This notation denotes the couple BID / ASK . First recorded value of BID, and then the last two digits quotes ASK. Knowing that ASK more than BID, and that the difference between them is less than 100 points, you can always unambiguously determine the value of the second quotation. In this case, ASK = 114.92.