Understanding Buying and Selling Prices in Trading

2023-06-05

Summary:

Mastering buying and selling prices in forex trading is vital for making informed decisions. Learn what they mean and how they help in the forex market.

All foreign exchange quotations include the bid and ask prices. So what do buying and selling prices mean?

Buy and sell currencies

The buying price is the exchange rate at which a trader is willing to buy the base currency and sell the quoted currency at this level. That is to say, the buying price is the exchange rate level at which the trader sells the base currency. For example, the quote for GBP/USD is 1.6332/10, and the purchase price is 1.6332, which means you can sell pounds to buy dollars at 1.6332.

The selling price is the exchange rate at which a trader is willing to sell the base currency and buy the quoted currency at this level. That is to say, the selling price is the exchange rate level at which traders buy the base currency. For example, the quote for EUR/USD is 1.4424/10, and the selling price is 1.4424, which means you can buy euros and sell dollars at 1.4424.

The bid-ask spread, also known as the "spread", is the difference between the buying price and the selling price. Most quotes refer to the first few digits of the buying and selling prices quoted by traders, which are often omitted from the traders' quotes. For example, the complete quote for USD/JPY is 118.30/118.36, but this quote is often omitted by traders as 30/36.

【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.

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