I notice bid and ask prices when trading but I’m confused about their difference.
Sometimes the gap is larger for certain assets. How does this impact my trades?
I’ve traded for a bit but never focused on this aspect.
Bid’s what buyers will pay, ask’s what sellers want. The gap between them is the spread: • Major pairs: 1-3 pips • Minor pairs: 3-10 pips • Exotics: 10+ pips. Bigger spreads mean higher costs and less profit.
Spread is the difference between buyers’ and sellers’ prices. You buy at the ask and sell at the bid. That gap is how brokers profit. For example, EUR/USD often has a 2 pip spread, meaning it needs to move 2 pips for you to break even. In volatile markets or with exotic pairs, spreads can widen significantly. Always check spreads before trading, especially during news events when they can increase drastically.
Spreads reveal market activity. In calm conditions, gaps remain small from steady trading.
When news hits or volume drops, spreads widen. This means you need larger price moves to avoid losses.
Look to trade during overlapping market hours for tighter spreads.
USD/TRY spreads absolutely destroyed me when I started trading exotics.
I’d think I was making money, but that massive bid-ask gap wiped out profits instantly.
Stick to majors during peak hours - you’ll get way better entry and exit points with those tight spreads.
Wider gaps eat into profits. Experienced a 15% loss on EUR/JPY due to them.