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What is Bid price and Ask price?

When trading on financial markets, it's important to bear in mind that there are always 2 prices at any given moment: the price at which you can buy an asset (the Ask price) and the price at which you can sell an asset (the Bid price).

Just think about what it's like when you go to the bank to exchange a foreign currency. You'll see two prices on offer there, too: one for buying and one for selling. The Buy price is always higher than the Sell price. It's exactly the same on the cryptocurrency market. The Ask price is what you pay when buying your crypto, and the Bid price is what you get when selling it.

Let's say you want to open a trade. You need to do a bit of chart analysis first if you're going to make the right decision. On the chart, you'll see the mid-price. This is the average price of the Bid and Ask prices.

Now imagine you decide to buy. In the open trade window, the price you'll see is the Ask. That's the price you'll pay when you buy your chosen coin.

 

 

Now that you've bought your desired cryptocurrency, you'll eventually have to close it. When you close your position, you'll do it at the Bid price. It makes sense: if you bought an asset, now you need to sell it. If you previously sold the asset, now you need to buy it back. So you open a position at the Bid price and close it at the Ask price.

Limit orders are also executed at the Bid price if they're being sold and the Ask price if they're being bought. Take Profit and Stop Loss limit orders are similarly executed at either the Ask or Bid price depending on the type of transaction.

    
 

Here's the key take-away. If you're selling something, it'll be at the lower price (the Bid). If you're buying it, it'll be at the higher price (the Ask).

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