CFDs are complex financial instruments and carry a high level of risk due to leverage. A significant proportion of retail investors incur losses when trading leveraged products such as CFDs. You should carefully consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your capital.
If you’re wondering what a bid is, it’s the price at which you can sell an asset on the market. It’s always the lower of the two prices displayed on the screen. The other is the ask (buy price). When you place a sell order, it’s executed at the bid price.
The meaning of “bid” is straightforward: it represents the highest amount a buyer is willing to pay for the asset at that moment. If you sell, you receive the bid price. If you buy, you pay the ask price. The difference between the two lies in the spread, which serves as an implicit cost of each trade.
To understand what “bid” means, you need to look at what happens behind the scenes. The price isn’t arbitrary; it responds to the dynamics of supply and demand.
Bids are listed in the order book as buy offers. Each buyer proposes a price. The highest bid is the one that appears on the screen. The more buy orders there are at similar prices, the greater the liquidity and the narrower the spread.
During periods of high liquidity (market open, session overlaps), the bid price moves closer to the ask price. Outside of trading hours or for thinly traded assets, the spread widens, and the bid falls further from the reference price.
Identifying what the bid is on your platform is the first step toward trading with cost control.
Locate the two prices. The lower one is the bid; the higher one is the ask.
Calculate the spread. Subtract the bid from the ask. For EUR/USD at 1.1040/1.1043, the spread is 3 pips.
Evaluate before selling. If you sell at the bid and want to buy back, you’ll pay the ask. The spread is deducted from the start.
In liquid markets, the spread is usually minimal. In less-traded assets, it can be significant.
A trader holds shares in a company trading at a bid of 48.50 USD and an ask of 48.70 USD. The trader sells 200 shares at the bid price and receives 9,700 USD. If the price drops and the new bid is 45.20 USD and the ask is 45.40 USD, he repurchases 200 shares at the ask price, paying $9,080. His gross profit is $620. The entry spread ($0.20 × 200 = $40) was already included in the execution price.
Many beginners ignore the bid price and lose money without understanding why. These mistakes are common.
Failing to check the spread before trading.
Selling during periods of low liquidity when the bid is depressed.
Confusing the market price with the actual bid.
The price you see on a chart is usually the last traded price, not the current bid. The difference matters when executing orders.
Knowing the bid gives you practical advantages when trading.
Calculating the actual price at which you’ll sell your position.
Comparing spreads across brokers and assets.
Choosing the time with the best liquidity to execute a trade.
A trader who monitors the bid before selling controls their actual costs on every trade.
The bid is the price at which you sell an asset. It’s always lower than the ask. The difference between the two is the spread, a cost present in every trade. Monitoring the bid and trading during times of high liquidity reduces that cost.