Bid Price, Ask Price, and Spread

Currency quotes are always listed in pairs; the base currency listed first, and the counter-currency listed second. A currency quote will look something like this:

EUR/USD 1.4050 / 1.4052

or

EUR/USD 1.4050 /52

In this case, Euro is the base currency and US dollars are the counter currency. 1.4050 is the current Bid (sell) price. It represents the price at which other investors are prepared to buy the currency from you. 1.4052 is the current Ask (buy) price. It is the price at which you can purchase the currency. In forex, the bid price is always lower than the ask price.

The spread is the difference between the bid price and ask price. In the above example, the spread is 2 pips. A pip (percentage in point) is simply the smallest value of measurement for currencies on the forex market. A pip is equal to .0001, or 1/100 of 1%.