Published November 1, 2026 · Beginner education
THE IDEA, IN PLAIN LANGUAGE
The bid is the price at which you can sell and the ask is the price at which you can buy. Their difference is the spread, a trading cost. Spreads can widen when liquidity is low or news is released.
KEY VOCABULARY
- Bid
- Available selling price.
- Ask
- Available buying price.
- Spread
- Difference between bid and ask.
A PRACTICAL EXAMPLE
If an illustrative bid is 1.0800 and ask is 1.0802, the spread is two pips. Commissions and financing may add further costs.
A COMMON MISTAKE
Ignoring costs when reviewing a demo strategy.
WHAT TO REMEMBER
Account for the full cost of entering, holding and exiting a position.
SOURCE REFERENCES
Use these external resources to study further. Explanations here are our own; external resources may change.
- BabyPips: related source lesson ↗
- BabyPips: School of Pipsology — beginner forex curriculum ↗
- CFTC: understand forex risks ↗
RELATED VIDEOS
No lesson-specific video is published here yet. Follow @koufaxbtb on Instagram for existing creator content; it is not a substitute for these source references.