Reading a Quote: Bid, Ask, Spread

Look closely at any live quote and you'll see two numbers, not one. The bid is the price at which you can sell. The ask (or offer) is the price at which you can buy. You always buy at the higher number and sell at the lower one — the market's small, built-in edge.

The spread is a cost

The gap between bid and ask is the spread, and it is the first cost of every trade. Buy at the ask, and if the price doesn't move you can only sell back at the lower bid — you are down the spread immediately. On a liquid major pair the spread might be a fraction of a pip; on an exotic pair or a thin stock it can be many times larger.

Pips, points and ticks

Different markets measure the smallest price move differently. In forex it's a pip (usually the fourth decimal); in index futures it's a point or a tick; in stocks it's a cent. The name changes but the idea is the same — the minimum increment price moves in, and the unit you'll use to measure your stops and targets.

When you compare brokers, spreads are one of the numbers that actually matters — which is exactly why our broker reviews list the typical spread alongside regulation and fees rather than burying it.