The bid/ask spread refers to the difference between the buy price and the sell price of an instrument.
- When you buy or go long, you enter the trade at the Ask price.
- When you sell or go short, you enter the trade at the Bid price.
The Ask price is also commonly referred to as the Offer price.
Example: The US30 index is quoted at 38,500 / 38,502.
- You can buy at 38,502 (the Ask price), or
- Sell at 38,500 (the Bid price).
The difference of 2 points between the Bid and Ask prices is known as the spread.