BID & ASK

It is known, that every transaction is executed at a rather well defined and concrete price, while the table Quote Spread Sheet lists three prices for each currency, for example:Each of the participants of FOREX market enters each trade as either a SELLER or a BUYER of a particular currency. In so doing, the seller offers the currency at a higher price, for example GBPUSD at 1.6325, while the buyer bids for it at a lower price, for example, GBPUSD at 1.6322. The seller's price is called ASK and the buyers price is called BID accordingly. This is why, if you anticipate GBPUSD to appreciate (your GBPUSD chart to go up), then you should decide to buy the pound when it is low to sell it high later. You can BUY only from a seller offering it at the price equal to ASK. Should you be selling the pound (this operation is called SELL), the buyer will bid at a price equal to BID for it (this holds true for all currencies). The obvious conclusion is that if you have OPENED a position (the operation is called OPEN), that is you have executed BUY GBPUSD, and want to CLOSE it immediately (the operation is called CLOSE), that is to sell the pounds you have just bought, then you could do it only at a loss, similar to what would happen at any currency exchange booth. Consequently, to make a profit you should let the rate move in the anticipated direction more than the difference between BID and ASK. The third number is called LAST, which is an average of last BID and ASK on Forex.As described in the section 3 above, currencies with a direct quote only appreciate when the chart goes up. Currencies with inverse quote depreciate when the chart goes up. Considering an upward movement on the chart, BUY operation would be confusing if it's profitable for some currencies but not for the others. To clear the confusion, the BUY operation for currencies with inverse quote, like USDJPY, was altered. BUY for USDJPY and the like buy not the currency itself, like JPY but it buys the US dollars instead, selling the other currency. For example, BUY USDCHF at 1.4500 buys 100,000 US dollars for 145,000 swiss franks. Thus, the BUY operation is always profitable when the chart goes up, SELL is always profitable when the chart goes down.OPEN BUY (up) is executed at the ASK, CLOSE - at the bid BID; OPEN SELL (down) – at the BID, CLOSE - at the ASK.