In plain English
What Bid price means
In a two-way forex quote, the bid is the price available to someone selling the pair. For EUR/USD, selling the pair means selling euros and receiving U.S. dollars. The bid is usually the lower of the two displayed prices; the higher figure is the ask price available to a buyer. Both price and available quantity can change before an order fills.
Why it matters
The bid price is the practical reference point for opening or closing a short position, and for closing a long position. It helps explain why a newly opened long position can initially show an unrealized loss: it was bought at the ask but would immediately be valued for sale at the lower bid.
Example
Assume GBP/USD is quoted 1.27110 / 1.27128. The bid is 1.27110. A trader who sells £10,000 at that simplified quoted price receives US$12,711 before any separate commission or financing charge. The 1.27128 ask is the price to buy pounds, not sell them.
Quick answers
Common questions
Does a bid price mean a trade has happened?+
No. A bid is a standing willingness to buy at a stated price and quantity. A trade occurs only when a compatible sell order is executed against it or when another execution method matches the parties.
Why is a long position valued using the bid?+
A long position is closed by selling the pair. Since the bid is the price currently offered by buyers, it is commonly used to estimate the amount received if that position were closed immediately.
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