Why is bid and ask different?

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Forex brokers will quote you two different prices for a currency pair: the  bid and  ask price.

The “ bid” is the price at which you can SELL the base currency.

The “ ask” is the price at which you can BUY the base currency.

The difference between these two prices is known as the  spread.

Also known as the “ bid/ask spread“.

The spread is how “no commission” brokers make their money.

This spread is the fee for providing  transaction immediacy. This is why the terms  “transaction cost” and “ bid-ask spread” are used interchangeably.

Instead of charging a separate fee for making a trade, the cost is built into the buy and sell price of the currency pair you want to trade.

From a business standpoint, this makes sense. The broker provides a service and has to make money somehow.

  • They make money by selling the currency to you for  more than they paid to buy it.
  • And they also make money by buying the currency from you for  less than they will receive when they sell it.
  • This difference is called the  spread.
Bid/Ask Spread
Bid/Ask Spread
  • www.babypips.com
The bid/ask spread is the difference between the bid and ask price. The “ask” price is also known as the “offer” price. It’s the difference between the buyer’s and seller’s prices. The “bid “represents demand and the “ask” represents supply for an asset. The spread is the transaction cost. “Price takers” buy at the ask price and sell at the bid...
 
Well explained. Thanks for the article.
 

When they are equal, a trade between the two parties occurs. Then they are no longer equal.

If I want to sell you my car for $10K, but you only want to buy it for $9K, guess what, nothing happens.

 
and how does that have anything to do with the ops question? The bid price line should be the same as on the Sell button, and the Ask price line should be same as on the Buy button, correct?
 

Please note that the OP is not asking for an explanation about Ask, Bid or Spread. He is asking why on the chart the Bid and Ask lines have different prices to those displayed on the Buy/Sell buttons.

I would add that they probably also differ to the Bid and Ask price on the Market Watch panel.

I've seen this happen before, but I attributed it to delays in updating the 3 GUI elements by the terminal software, when it is under heavy load, but it never last more than a couple of seconds when the CPU was really loaded.

 
Fernando Carreiro:

Please note that the OP is not asking for an explanation about Ask, Bid or Spread. He is asking why on the chart the Bid and Ask lines have different prices to those displayed on the Buy/Sell buttons.

I would add that they probably also differ to the Bid and Ask price on the Market Watch panel.

I've seen this happen before, but I attributed it to delays in updating the 3 GUI elements by the terminal software, when it is under heavy load, but it never last more than a couple of seconds when the CPU was really loaded.

while i would have agreed with you in the past, I have seen this same thing happen when i have nothing on the charts. So we need an explanation from someone higher up, thanks anywasy fernando.

 
Revo Trades: while i would have agreed with you in the past, I have seen this same thing happen when i have nothing on the charts. So we need an explanation from someone higher up, thanks anywasy fernando.

There was a thread last month about someone having an issue with the latest official build of MT4 not updating the Market Watch time when it was undocked. I wonder if in this OP's case and in your case as well, there is some common factor.

In your case Revo, are you using Windows, Linux or Mac? I'm wondering if it has something to do with the OS's messaging or interrupt handling problems that cause the GUI not to update?

 
Fernando Carreiro:

Please note that the OP is not asking for an explanation about Ask, Bid or Spread. He is asking why on the chart the Bid and Ask lines have different prices to those displayed on the Buy/Sell buttons.

I would add that they probably also differ to the Bid and Ask price on the Market Watch panel.

I've seen this happen before, but I attributed it to delays in updating the 3 GUI elements by the terminal software, when it is under heavy load, but it never last more than a couple of seconds when the CPU was really loaded.

CPU is not under any stress. It seem the CHART lines are the ones that are wrong.



Fernando Carreiro:

There was a thread last month about someone having an issue with the latest official build of MT4 not updating the Market Watch time when it was undocked. I wonder if in this OP's case and in your case as well, there is some common factor.

In your case Revo, are you using Windows, Linux or Mac? I'm wondering if it has something to do with the OS's messaging or interrupt handling problems that cause the GUI not to update?

Market Widow is docked as normal.

 
 Clean chart, zoomed all the way in.
 
WorthyVII: CPU is not under any stress. It seem the CHART lines are the ones that are wrong. Market Widow is docked as normal.

Does it only happen when you have a particular EA or Indicator running on the chart, or does it also happen when the chart is absolutely clean?

I believe it may also happen when an Indicator or EA, takes to long to return from processing a tick event!

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