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You intend to purchase the base currency

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Category: Beginners Guide

Bid and Ask

As with most buying and selling in the monetary markets, if you find yourself buying and selling a currency pair there is a bid worth (buy) and an ask value (promote). Once more, these are in relation to the bottom currency. When buying a foreign money pair (going lengthy), the ask value refers to the quantity of quoted currency that must be paid as a way to buy one unit of the bottom currency, or how much the market will promote one unit of the base forex for in relation to the quoted currency.

The bid worth is used when promoting a forex pair (going brief) and reflects how much of the quoted forex can be obtained when selling one unit of the bottom forex, or how a lot the market will pay for the quoted currency in relation to the bottom currency.

The quote earlier than the slash is the bid price, and the 2 digits after the slash symbolize the ask value (solely the final two digits of the full worth are usually quoted). Note that the bid price is at all times smaller than the ask price. Let us takea look at an example:

If you want to purchase this foreign money pair, this means that you intend to purchase the base currency and are therefore wanting at the ask worth to see how much (in Canadian dollars) the market will cost for U.S. dollars. In line with the ask worth, you should buy one U.S. dollar with 1.2005 Canadian dollars. 
U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All trades, patterns, charts, systems, etc., discussed in this advertisement and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or Tradewins.