Bid Price Definition – What is Bid Price? | CFI

bid price

The bid price is the highest price that a buyer (the bidder) is willing to pay for goods or services. In this definition, it is related to financial instruments or products such as securities, commodities, or Forex to name just a few examples.

 

When viewing financial price quotes, these will be displayed as two numbers. For example, GBP/USD (commonly known as Cable) may be quoted via a live broker or trading platform as 1.2380-1.2381.

 

Using the above example, the bid price or simply the bid would be 1.2380 which is the highest price available in the market at which a buyer (the bidder) is prepared to buy GBP/USD. The higher number quoted is the ask or offer price and is the lowest price at which a seller is prepared to sell GBP/USD.

 

The difference between the two prices above is referred to as the bid/ask spread or more commonly just the spread. The closer or tighter the spread, the more beneficial this is to traders.

  

Key takeaways:

  • The bid price is the highest price in the market that a buyer will pay for a financial instrument.
  • The difference between the bid price and the ask price is known as the spread.
  • The bid price is normally lower than the offer price unless in extreme circumstances.
Credit Financier Invest (Mauritius) Ltd is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
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Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. Credit Financier Invest (Mauritius) Ltd provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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