What is Forex Trading? Find out Here!
Like any other trading price, the spread for a forex pair consists of a bid price at which you can sell (the
lower end of the spread) and an offer price at which you can buy (the higher
end of the spread). It is important to note, however, for each forex pair,
which way round you are trading. When buying, the spread always reflects the
price for buying the first currency of the forex pair with the second. So an
offer price of 1.3000 for EUR/USD means that it will cost you $1.30 to buy €1.
You would buy if you think that the price of the euro against the dollar is
going to rise, that is, if you think you will later be able to sell your €1 for
more than $1.30. When selling, the spread gives you the price for selling the
first currency for the second. So a bid price of 1.3000 for EUR/USD means that
you can sell €1 for $1.30. You would sell if you think that the price of the
euro is going to fall against the dollar, so you can buy back your €1 for less
than the $1.30 you originally paid for it.
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