Direct answer
In forex, bid and ask are two different prices shown for the same currency pair. Bid is the price at which a market participant is willing to buy the base currency from you. Ask (also called offer) is the price at which a market participant is willing to sell the base currency to you. Because these prices are different, a spread exists between them.
How bid and ask work
Forex quotes are typically presented as Bid/Ask for one pair (for example, “1.1200 / 1.1202”). If you are looking at bid and ask for a pair, the meanings depend on the side you want to trade:
- If you want to sell, you are usually matched against the bid price, because that is what the market is paying to buy.
- If you want to buy, you are usually matched against the ask price, because that is what the market is charging to sell.
The spread is the numerical difference between the ask and the bid. In general terms, the spread matters because it is effectively a cost of entering and exiting trades: if you buy at the ask and later sell at the bid, the spread can reduce the immediate price difference you experience.
Example and quick checks
Suppose a quote shows Bid = 1.1200 and Ask = 1.1202. The spread is 0.0002 (Ask minus Bid). If you buy, you reference 1.1202; if you sell, you reference 1.1200.
Two practical checks help you interpret quotes without relying on assumptions about future prices:
- Confirm that ask is equal to or higher than bid in the displayed quote.
- Compare how the spread width changes between calm and active moments; wider spreads often indicate lower liquidity or greater uncertainty.
Limitations and what you can independently verify
Bid and ask are market quotes at a moment in time, not a guarantee of how prices will move next. Quotes can change quickly, and different venues or platforms may display slightly different values at the same time due to execution rules, liquidity sources, and timing.
Also, while the general relationship “ask − bid = spread” is a useful way to understand the quote, the exact spread you experience can depend on how your order is handled (for example, whether it executes immediately at the displayed quote or under different matching conditions). For verification, rely on the actual bid/ask numbers shown on the specific quoting source you are using at that moment, and note that these are dynamic.