Forex Bid Ask Price - The Bid/ask Spread and How it Effects Trading

Nov. 27, 2010 - PRLog -- Forex Bid Ask Price

The Bid/Ask Spread is important factor in trading. This is true whether it is stock trading, options trading, Forex trading, or pretty much any other asset. The Bid Price is the current highest price at which someone in the market is willing to buy a stock. The Ask Price is the current lowest price that someone is willing to sell a stock. The difference in these two amounts is called the Bid/Ask Spread. These prices are constantly changing during each trading session as shares change hands.

The Bid/Ask Spread is determined mainly by liquidity. If a stock is highly liquid, meaning there is a large volume of shares being bought and sold, the Bid/Ask Spread will be much lower. A low Bid/Ask Spread is important to traders because the extra cost that you pay in the spread will eat away at the profits of your trades. Get Internet #1 - Forex Bid Ask Price @ http://forexcure01.webs.com and be Successful forever!

For example, on a certain low volume stock, if the Bid Price is $69.33 and the Ask Price is $70.33 the Bid/Ask Spread would be $1.00. If you were to buy 1,000 shares and then immediately sell them using market orders (assuming everything stays the same and not factoring in commissions) your loss would be $1,000 just because of the spread. High volume stocks or ETFs such as MSFT or QQQQ can have spreads as low as a couple cents because huge numbers of shares are changing hands every minute on those securities. Get Internet #1 - Forex Bid Ask Price @ http://forexcure01.webs.com and be Successful forever!

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