hey guys, which one is the buy and which one represents the sell price, I am legitimately confused.
This topic is covered in our lesson, What is the Bid and Ask Price?
But in a nutshell:
Bid Price: The highest amount a buyer wants to pay.
Ask Price: The lowest amount a seller wants to accept.
The “spread” is the gap between these two prices. The bid price is for buying, and the ask price is for selling.
I think of it like in a retail situation. If you want to buy a shirt from a shopkeeper, you will have to pay him the ask price: but he didn’t get that shirt at that same price, he paid less so he could put it in his window and sell it at a profit - he paid the bid price.
The difference is the shopkeeper’s profit. He buys at a lower and sells at a higher price so that he makes a profit on the difference.
Most trading charts are drawn from the bid price.