Make no mistake though, the spread on some of the less-liquid currency pairs can be significant and should certainly be considered before taking a trade, even when trading the higher time frames. We all know that the Forex market is a global market consisting of different trading sessions. These sessions are:. The bid ask spread for a currency pair can vary depending on the current trading session.
For the most part the bid ask spread will be the lowest during the London and New York sessions as these carry the largest trading volume. However there is a three hour window that occurs immediately after the New York session closes and before Tokyo opens in which the spreads can considerable.
This is especially true for some of the currency crosses and exotic currency pairs but can also effect the major currency pairs. In fact as a general rule you should always check the bid ask spread before entering a trade regardless of the current trading session. Before we close out this lesson, here are a few key points to keep in mind when it comes to the bid ask spread.
I hope this lesson has helped you to better understand the Forex bid ask spread as well as when to take extra care and watch for larger-than-usual spreads. The spread is the difference between the bid and the ask price. In Forex, that spread is represented by pips. What Is the Bid and Ask in Forex? What is the bid in Forex? The bid is the price buyers are willing to pay for a market. Rohn Jim. In forex trading, YOU are considered a price taker.
And your forex broker is the price maker, also known as a market maker. This means: The BID represents the price at which the forex broker is willing to buy from you the base currency in exchange for the counter currency. The ASK price is the price at which the forex broker is willing to sell to you the base currency in exchange for the counter currency.
You see a car you like and inquire about the price. Your forex broker is like the car dealer, so you can apply these same concepts in forex trading.
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