Bid, Ask, and Spread Explained Simply
Every price you see on a forex chart is really two prices. One is what the market will pay you, the other is what it will charge you, and the gap between them is a cost you pay on every single trade.
Getting bid, ask, and spread explained simply clears up a lot of things that confuse newer traders, from why a trade opens in the red to why a stop gets hit when the chart says it shouldn’t have.
What the Bid and Ask Prices Are
The bid is the highest price you can sell at right now. The ask is the lowest price you can buy at right now. The ask is always the higher of the two.
So if EURUSD shows a bid of 1.08500 and an ask of 1.08510, you can sell at 1.08500 or buy at 1.08510. You can’t do both at the same price.
When you buy, you open at the ask and close at the bid. When you sell, you open at the bid and close at the ask. That one rule explains most of what follows.
What the Spread Is
The spread is the difference between the bid and the ask. In the example above it’s 0.00010, which is 1 pip. MetaTrader 5 shows spreads in points, and on a five-digit quote 1 pip is 10 points, so the platform would show that spread as 10.
The spread is the cost of getting in and out. On a standard lot of EURUSD, 1 pip is worth about $10, so a 1 pip spread means the trade starts $10 behind the moment it opens. Price has to move that far in your favour just to break even.
Spreads aren’t fixed. They usually widen when there’s less liquidity, such as around major news releases, at the daily rollover and when the market opens on Sunday night. A pair that normally costs 1 pip can briefly cost several.
Where to See Them in MT5
The Market Watch window shows the bid, the ask and the spread for every symbol. If the spread column isn’t visible, right-click inside Market Watch and add it from the columns list.
Your chart is a different story. In MetaTrader 5, bars are built from bid prices, so the candles only show you one side of the market. The ask price, which you buy at, isn’t drawn by default. To see it, open the chart properties and switch on Show Ask price line.
Why This Matters on a Prop Account
Because charts are drawn on the bid, the ask can reach a level the candles never show. A long position closes at the bid, so its stop loss is triggered by the bid. A short position closes at the ask, so its stop is triggered by the ask. That’s why a short can get stopped out while the chart looks like price never touched your level. It did, on the side of the market you can’t see.
The spread also counts against you straight away. At TTT Markets, both the daily drawdown and the maximum loss are measured against real-time equity, including floating profit and loss. Every position opens with a small floating loss equal to the spread, so it uses a little of your room before price has moved at all. On one trade it’s small. On many trades, or larger positions, or when spreads widen around news, it adds up.
If you want to see how spreads behave on TTT Markets before you start a challenge, TTT provides a read-only MT5 spread test account on its trading platforms page.
Conclusion – Bid, Ask, and Spread Explained Simply
Bid, ask, and spread explained simply comes down to this. You buy at the ask, sell at the bid, and the gap between them is what every trade costs. Show the ask line on your charts, watch the spread in Market Watch, give stops on short trades a little extra room, and remember that on a prop account the spread comes out of your equity the moment you open a position.
FAQ – Bid, Ask, and Spread Explained Simply
1. Why does my trade show a loss as soon as I open it?
Because of the spread. A buy opens at the ask but is valued at the bid, and a sell opens at the bid but is valued at the ask. The difference shows as a small floating loss until price moves your way.
2. Why did my short trade get stopped out when price didn’t reach my stop?
MT5 draws charts using the bid, but a short closes at the ask. If the spread widened, the ask could reach your stop while the bid stayed below it. Turn on the ask line in chart properties to see both.
3. When are spreads widest?
Usually when liquidity is thin, such as around major news releases, at the daily rollover and at the Sunday market open. Check the spread in Market Watch before you enter during those times.
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