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What is the Offer (Ask) - Offer (Ask) Definition

2018-09-19 09:11    forextraders

Offer (Ask) Definition. The Offer (Ask) quote is the price you must pay to acquire what is known as the “Base” currency. Dealing in currencies can be confusing at the start because you must always deal with a currency pair. The first currency in the pair is the “Base” currency. The second currency in the pair is labeled the “Quote” currency or “Counter” currency. A quotation then defines how many units of the counter currency are needed to buy one unit of the base currency. The quotation of a currency pair usually consists of two prices, much as with stocks traded on an exchange. The “Bid”, usually lower than the “Ask”, is the price at which a market maker or a broker is willing to buy the base currency in exchange for the quote currency. Ask or Offer, usually higher than Bid, is the price at which a broker is willing to sell the base currency in exchange for the quote currency. If the Bid price for a EUR/USD pair is 1.2750 and the Offer price is 1.2752, the difference, 2 “pips” in forex trader slang, is referred to as the “spread”. Most forex brokers derive their trading profits from the spread, so it is beneficial to review broker spreads before transacting trades. In this example you would pay $1.2752 to acquire one Euro.

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