Plenty of negative words have been applied to forex: it’s complicated, difficult, will only cost you money, and you should stay away. Reading something like this might have you wary of such a large financial market. It doesn’t have to be this way at all. It does take hard work. It will take proper education. At the end of your lessons and continued education as you trade real money, you can see a profit. The only way to make it happen is to understand the market. Let’s start with forex live rates. Trading platforms should offer live rates that change as the market investors sell or buy currency pairs. As long as the rates are up to the millisecond you can trade with confidence. A delayed stream is not going to help you.
Forex Live: Bid and Ask Relationship
Before you can delve into trade on forex live rates you need to understand how to read them. Do you know what the bid and ask are? If you have yet to learn this point, than continue because it is something you are most likely going to encounter in a demo, app, or trading platform.
Forex quotes are always in two prices for the foreign exchange market. You have the bid and ask price, in which the bid price is usually lower than the ask. This might offer you a clue as to what the bid and ask mean. If you already know the sell price is higher than the buy price you should know what the bid and ask are.
Still, for clarification purposes the bid price is what your forex broker buy price is set at for the base currency. Forex live sites might tell you it is the buy price instead of the bid, but if you are armed with both terms you won’t have anything to worry about. The ask price is what the sell price on the base currency is set at. Ask can also be called offer or sell.
Forex Live Explanation on Price Difference
You might wonder as a beginner why the price is different. Why is there even a bid and ask price instead of just one price like in the stock market? The answer is simple- brokers have to make money. The difference between the two prices is the spread, which is the fee charged for helping you place trades on forex live platforms.
If the bid price is 1.3456 and the ask price is 1.3458, there is a difference of 2 pips. If you select ask or sell you will sell the base currency at the 1.3458 price. If you select bid you buy the base currency at 1.3456.
There is another way of looking at the quotes, which has often been confusing and this is why you need to understand it. The broker providing the forex live rates might tell you that the bid is buy, but that is what you will choose to sell to the market and the ask is what they sell to you, thus what you buy. Just note the higher price is the price that allows you to go short on the currency pair.