Forex Ask Rate, Bid Rate, Spread

EUR/USD ASK ,BID AND SPREAD
The terms Ask rate and Bid rate are crucial in trade transaction, not only in forex but also in every other market like securities, derivatives, etc.  First we should know about bidders and sellers. Bidders are buyers, those who are looking to buy something.  Asking people are sellers, those who are looking to sell something.

BID PRICE:

The maximum rate that buyers/bidders are willing pay for a currency in a trade is BID PRICE.  

ASK PRICE:

The minimum rate sellers are willing to receive for the currency in a trade is ASK PRICE.   Broker plays the middle role to connect both the bidders and sellers.

The bidder bids at the current market price when he is ready to buy and the broker looks for a seller who ask price is near the bid price then completes the trade. Lets us take an example from the above figure.

Bid price = 1.13252
Ask price = 1.13264

1.13252 is the maximum price bidder is bidding and 1.13264 is the minimum price seller is willing to receive. The bidder gets the required currency at ask price and the seller gets currency at bid price. Why that difference even though BID and ASKS are MAXIMUM and MINIMUM respectively, it is spread the costumer have to tolerate. 

Finally if buy a currency at 1.13252(BID PRICE) you will get it at 1.13264(ASK PRICE) because of the spread that you have to pay for broker.

SPREAD:  

The difference between ask price and the bid price is SPREAD.
ASK PRICE – BID PRICE = SPREAD

If you want buy a currency, you will quote the bid price and then the ask rate near to your bid rate is taken into account by the broker then trade is executed. If you want to sell a currency, broker will find the bidder near to you ask price then executes the trade.

Buy = BID PRICE + SPREAD

Sell = ASK PRICE + SPREAD 

forex market watch bid, ask, spread with high and low values
FOREX MARKET WATCH
Always there will be gap between ask line and bid line that gap is important for spread and broker’s profit and commission. In any forex chart the line that showing the price of a pair is bid line.

Spread always keeps changing for pair to pair and from time to time. Spread rate is decided by various factors; In general spread rate is 1.4-2.2 pips for EUR/USD and 2-4 pips for GBP/USD and goes on like that. There is no trading without ASK,BID and SPREAD.