The bid is the highest price a buyer is currently willing to pay, so it is the price at which you can sell. The ask, also called the offer, is the lowest price a seller will currently accept, so it is the price at which you can buy. The spread is the difference between the two, and you pay it every time you open and close a trade.
Spreads are usually small, often a pip or less on major forex pairs during busy hours. But they add up over many trades, they widen when markets are thin or volatile, and they explain some confusing moments, such as a stop loss being hit when the chart never touched it.
This guide works through bid, ask, mid price and spread on EUR/USD, gold and Bitcoin, then shows how to plan stops and targets with the spread in mind.
Bid, ask and mid price
Every market quote has two sides:
- Bid: the price at which you can sell right now.
- Ask: the price at which you can buy right now. It is always higher than the bid.
- Mid price: the halfway point,
(bid + ask) ÷ 2. It is a reference price; you cannot trade at it directly.
Whoever quotes both prices, such as a market maker, earns the gap for standing ready to take either side of your trade.
Spread = ask − bid
How to measure the spread
Spreads are measured in each market's own units: pips for forex, dollars or points for gold, and dollars or a percentage for crypto. A percentage of the mid price lets you compare very different markets.
EUR/USD in pips
For example, EUR/USD is quoted at 1.0850 bid and 1.0851 ask.
- Spread: 1.0851 − 1.0850 = 0.0001, which is 1 pip
- Mid price: (1.0850 + 1.0851) ÷ 2 = 1.08505
- Cost on one standard lot (100,000 euros, $10 per pip): $10
- Cost on one mini lot (10,000 euros): $1
If pips and lots are new to you, see pips, lots and leverage.
Gold in dollars and points
For example, gold (XAU/USD) is quoted at $2,400.00 bid and $2,400.30 ask.
- Spread: $2,400.30 − $2,400.00 = $0.30
- Mid price: $2,400.15
- Cost on one lot of 100 troy ounces: $0.30 × 100 = $30
On a platform that quotes gold to two decimals, the smallest price step, often called a point, is $0.01, so this spread is 30 points. There is no single standard pip for gold, so compare gold spreads in dollars, and check the contract size in your platform's contract specification.
Bitcoin as a percentage
For example, BTC/USD is quoted at $64,990 bid and $65,010 ask.
- Spread: $65,010 − $64,990 = $20
- Mid price: $65,000
- Spread as a percentage: $20 ÷ $65,000 × 100 ≈ 0.031%
- Cost on 0.5 BTC: 0.5 × $20 = $10
Comparing the three
| Market | Bid | Ask | Spread | Spread as % of mid |
|---|---|---|---|---|
| EUR/USD | 1.0850 | 1.0851 | 1 pip | about 0.009% |
| Gold | $2,400.00 | $2,400.30 | $0.30 | about 0.0125% |
| BTC/USD | $64,990 | $65,010 | $20 | about 0.031% |
In these illustrative quotes, Bitcoin's spread is more than three times EUR/USD's as a share of price. Real spreads change constantly, so check the live quote.
Why longs open at the ask and shorts at the bid
When you open a long (buy) position, you buy at the ask. To close it you sell, so you exit at the bid. A short works the other way: you open by selling at the bid and close by buying back at the ask.
That is why every new position starts with a small loss equal to the spread. For example, if you buy one standard lot of EUR/USD at the ask of 1.0851 while the bid is 1.0850, your position is valued at the price you could close it at, the bid. It shows −1 pip, or −$10, before the market has moved. The bid has to rise by the spread just for you to break even.
| Position | Opens at | Closes at | Stop loss and take profit trigger on |
|---|---|---|---|
| Long (buy) | Ask | Bid | Bid |
| Short (sell) | Bid | Ask | Ask |
Why your fill can differ from the chart
Most charts plot one price for each moment. Many platforms, including MT5 by default, build their candles from the bid; others plot the mid price or the last traded price. So the line you watch is not always the price you trade at.
On a bid-based chart, a long position's exits trigger on the bid, the price you see. Any order that buys, such as a short's stop and target or a buy entry order, triggers on the ask, which sits above the chart line by the spread.
Worked example: the stop the chart never touched
For example, you are short EUR/USD with a stop loss at 1.0900. A data release hits, the bid spikes to a high of 1.0898, and the spread briefly widens from 1 pip to 3 pips.
- Highest ask: 1.0898 + 0.0003 = 1.0901
- Your stop at 1.0900 is below 1.0901, so it triggers
- The chart's highest candle shows 1.0898, 2 pips below your stop
Nothing malfunctioned: your short could only close by buying at the ask, and the ask crossed your level. Many platforms can also show an ask line on the chart.
When spreads widen
Spreads reflect liquidity, meaning how many buy and sell orders sit near the current price. They tend to widen:
- When liquidity is low, such as late in the US afternoon, on public holidays, or on a pair outside its main session.
- Around the open and close, especially when forex reopens after the weekend and around the daily rollover at about 5 pm New York time.
- Around major news, such as interest rate decisions and employment reports, when liquidity providers pull back.
- In fast markets, when prices move sharply and quotes change from moment to moment.
The guide to market hours and trading sessions explains when each market is busiest and quietest.
Spread vs slippage
Both are costs, but they are different things.
- Spread is the gap between bid and ask at a given moment. You can see it before you trade.
- Slippage is the difference between the price you expected and the price you got. It happens when price moves before your order fills, typically with market and stop orders in fast markets or when price gaps.
Slippage can work for or against you. A limit order fills only at your price or better, so it does not slip against you, but it may not fill at all. The guide to order types explains which orders can slip.
How to include the spread in stops and targets
Plan each exit around the price it actually triggers on.
- Measure risk from your real entry price: the ask for a long, the bid for a short.
- For a short, place the stop beyond the level by the spread plus a buffer, since it triggers on the ask.
- For a short's target, aim slightly above the level, because the ask, not the chart, has to reach it.
- Widen the buffer in volatile periods. A stop one pip beyond a level can be triggered by spread widening alone.
Worked example: a short on gold
For example, you sell one lot of gold (100 troy ounces) at a bid of $2,400.00 with a $0.30 spread. You see support at $2,370 and resistance at $2,420.
- Target: if the bid falls to exactly $2,370.00, the ask is $2,370.30. A buy limit at $2,370.00 would not fill; one at $2,370.50 would.
- Stop: if the bid touches $2,420.00, the ask is $2,420.30. A stop at $2,420.10 would trigger without the chart ever reaching it. A stop at $2,421.00 leaves room for the spread plus some widening.
- Risk: from $2,400.00 to $2,421.00 is $21.00 per ounce, or $21.00 × 100 = $2,100 for the lot.
Use that full distance from your actual entry when you calculate position size.
Common mistakes
- Ignoring the spread on short timeframes. A 1-pip spread on a 5-pip target takes 20% of the potential gain. Fix: compare the spread with your typical target and stop before choosing a timeframe.
- Placing a short's stop exactly on a chart level. Fix: add the spread plus a buffer, since the stop triggers on the ask.
- Entering just before major news or the daily rollover with a tight stop. Fix: check the economic calendar and the live spread first.
- Measuring risk from the chart price instead of the fill price. Fix: use your actual entry price when you calculate the stop distance.
Key takeaways
- The bid is the price you can sell at, the ask is the price you can buy at, and the spread is the gap between them.
- Longs open at the ask and close at the bid; shorts open at the bid and close at the ask.
- Many charts plot the bid, so a short's stop can trigger on the ask without the chart touching it.
- Spreads widen when liquidity is low, around the open, close and rollover, and around news.
- Slippage is the gap between your expected price and your actual fill, which is different from the spread.
- Place exits where they actually trigger, and include the spread in your risk.
Frequently asked questions
Why is the ask always higher than the bid?
The ask is the lowest price sellers will accept and the bid is the highest price buyers will pay. If the two met, those orders would trade with each other immediately, so the best prices left on each side always have a gap between them.
Is a 1-pip spread good?
On a major pair such as EUR/USD, a spread of about 1 pip or less during busy hours is common. Whether it is acceptable depends on your style: a scalper aiming for 5 pips feels it far more than a swing trader aiming for 100. Judge the spread against your typical stop and target.
Is the spread the only trading cost?
No. Depending on the account, you may also pay a commission per trade, an overnight swap or funding charge for holding positions, and slippage on fast-moving orders. Adding these up over a month of trades shows what your trading really costs.