When trading CFDs or other financial instruments, you’ll often see two prices quoted: the ask price and the bid price. These prices are essential to understanding how trades are executed and where costs like spread come into play.
Ask Price – The Buying Price
The ask price is the price you pay to buy an instrument. It represents the lowest price a seller is willing to accept at that moment. If you're entering a long (buy) position, this is the price your trade will open at.
Bid Price – The Selling Price
The bid price is the price you receive when selling an instrument. It reflects the highest price a buyer is willing to pay. If you open a short (sell) position, your trade will execute at the bid price.
Why It Matters
The difference between the ask and bid is called the spread, which represents a small cost built into every trade. Understanding these prices helps you better manage your entries, exits, and overall trading performance.