A tradable instrument is normally quoted using two prices:
- Bid — the price at which you can sell.
- Ask — the price at which you can buy.
The Ask price is also commonly referred to as the Offer price.
The difference between the Bid and Ask prices is called the spread.
Example
If an instrument is quoted at:
38,500 / 38,502
you can:
- sell at 38,500, the Bid price; or
- buy at 38,502, the Ask price.
The difference of 2 points is the spread.
Spreads are not fixed and may widen or narrow depending on factors such as market liquidity, volatility, trading hours and market conditions.