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What are Ask and Bid prices?

At any given time, every asset on the market has two prices:

- The 'Ask' price at which an asset can be purchased.

- The 'Bid' price at which an asset can be sold.

The spread is the difference between the Bid and Ask prices.

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What price is used to build a chart in Libertex?

The Bid price is displayed by default, but users can select the price they want to be displayed on the chart on the platform. To change this parameter, just click on the arrow icon showing the direction and select the price display type in the dropdown menu.

In the trade window, users can see the chart display as prices in the trade direction they've selected. That could be:

  • The Ask price, when buying an asset.

  • Or the Bid price, when selling an asset.

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Examples

Understanding how trades are opened and closed based on Bid and Ask prices is key to successful trading. Let's explain this with a practical and easy-to-follow example.

Buying and selling gold for a profit

🔍 Suppose…

You have analyzed the precious metals market and conclude that the price of gold will rise.

So you decide to buy an ounce of gold at $1,800. That is the Ask price.

⏳ Three months later…

The price of gold rises, and you sell it at $2,000, which is the Bid price.

Since you bought at $1,800 and sold at $2,000:

💰 Profit earned: $200

📈 This is a successful buy trade:

  • Opened at the Ask price

  • Closed at the Ask price

Selling and buying back gold at a profit

🔄 In another scenario…

You have an ounce of gold, and your analysis suggests its value will drop, so you sell it at $1,800 (the Bid price).

After a while, gold drops to $1,400, and you decide to buy it back. This new price is the Ask price.

💰 Profit realized: $400

You sold high and bought low: $1,800 - $1,400 = $400 profit.

Here, you made a profitable sell trade:

  • It opened at the Bid price

  • It closed at the Ask price

What's the key? Know the prices

To avoid confusion, remember this rule:

🛒 Buy Trade

  • Opens at the Ask price

  • Closes at the Bid price

🏷️ Sell Trade

  • Opens at the Bid price

  • Closes at the Ask price

This applies to both the Forex market and other financial instruments.

Practical advice

Whenever you're trading, make sure you correctly visualize the prices for the type of trade you're making.

This will help you correctly calculate your entry and exit points, and your potential profit.

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