the higher the timeframe you trade. The first" is the bid (the price at which someone is currently willing to buy dollars against the yen) and the second" is the ask (the price at which someone is willing to sell dollars against the yen). Bids (buyers) on the left, asks (sellers) on the right, with a bid-ask spread in the middle. All limit orders outstanding at a given time (i.e. Since brokerage commissions do not vary with the time taken to complete a transaction, differences in bid-offer spread indicate differences in the liquidity cost. The bid-ask spread percentage gives a good indication of how liquid a stock is and how much danger there is in using market orders to buy and sell shares for your portfolio. One way to think about it, though, is to assume that the real current value of the stock is halfway between the bid and the ask. From an investor's point of view, the spread is an extra cost, akin to the broker's commission.
A trader who wants to buy dollars against the yen at the market must deal at the offer of 106.08. For a larger transaction of 1,000 shares on a stock with a bid-ask spread of a dime, the cost is much higher: 1,000.10 x 1/2,. Bids offers, the forex market"s dealable real-time bids and offers for each currency pair. When two parties agree on a price, a trade goes through. The difference between those prices (3 pips ) is the spread. We'd love to hear your questions, thoughts, and opinions on the Knowledge Center in general or this page in particular. The highest price at which a market-maker will buy the stock is known as the bid, while the lowest price among those willing to sell is called the ask. The dollar will weaken against the yen). If you sell you will enter the market.36298. (During very volatile times, there may be some discrepancy.) This price transparency is a great advantage, as the trader knows with almost certainty the price at which a trade can be done, however under extraordinarily volatile market conditions, order execution. Notice that the true cost of the bid-ask spread doesn't have anything to do with the price of the stock but rather only with the number of shares and the size of the spread. For instance, a 100 stock with a spread of a penny will have a spread percentage.01 / 100.01, while a 10 stock with a spread of a dime will have a spread percentage.10 /.