Sunday, 5 January 2014

Buy And Sell Spread

In Forex, there is a difference between the selling price and the exchange rate difference to buy, and it is called the Spread. Price of the selling (Bid) rate is always lower than the purchase price (Ask).


Example: EUR/USD Bid Ask 1.3000 1.3002
Bid = To Sell; Ask = Buy
The example above is marked the buy and sell price spreads from EUR/USD which amounted to 2 pip (or 2 points).
The intent of this spread is to indicate the difference between the selling price and buy us, who where when if we update the order with the Bid then we should see Ask prices to calculate the profit or loss to us, and vice versa.
So suppose we ordered with the Bid at 1.3000 (Bid (sell) means if the price drops then we will get a profit) after that we see it later from the Asknya numbers, so when then Ask him down smaller than 1.3000 then we will get the profit
Example: 6 pm position in EUR/USD: Bid Ask 1.3000 1.3002 (At this time we order the Bid at 1.3000)
7 EUR/USD position afternoon turned into: Bid Ask 1.2986 1.2988 (in this moment we close our position reply from 1.3000 at 1.2988

see figures Ask him)
In this example, we will get a profit amounting to 1.3000 – 1.2988 = 12 points
When we order the Bid (Sell), and then Ask if his move down smaller than our original Bid number, then we will get the Profit.
When we order with Ask (Buy), and then if his Bid numbers move up exceed the figures Ask us again, then we'll get the Profit.
But if on the contrary it will be Loss.

How much is the value per Pip movement (Point)?
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