Foreign exchange as an investment project will naturally have a buying price and a selling price, but for investors how to determine the buying price and selling price is a science.

When traders conduct online foreign exchange margin trading, it is not difficult to find that there will be two prices on the trading platform. The reason for this situation is that in the market where retail foreign exchange traders trade, the foreign exchange margin service providers of the traders play the role of the price makers, and they quote the two-way price to the traders. This price simply represents the price at which he is willing to buy and sell a particular currency. Traders can choose to buy or sell at the price they think is appropriate.

What are the foreign exchange buying and selling prices?

In this case, it is very common for online trading platforms to shorten the quotation in order to save screen space. Investors can find that the gear is either deleted or displayed in a font smaller than other numbers.

Buying price: Under normal circumstances, the buying price will be quoted first and displayed on the left side of the two-way quotation. For example: AUD/USD is quoted at 1.07921/1.07948, then in this quote, 1.07921 is the buying price. The buying price indicates that the party who quoted the price (that is, the price makers) is bidding, and he is willing to buy the base currency from the foreign exchange trader at this price, and at the same time sell the dollar to the trader. If the trader is willing to sell Australian dollars to the price makers, they can sell at this price, and at the same time, they will receive the US dollars after the transaction. There are also some trading platforms that directly mark the buying price as selling, indicating that this price is the price at which the trader can sell the currency pair. This method is more clear to the trader.

Selling price: We can know if there is a buying price, the selling price is on the right side of the two-way quotation. The quotation of AUD/USD in the buying price is 1.07921/1.07948, and 1.07948 is the selling price we are talking about. It indicates that the price makers are willing to sell Australian dollars to traders at a price of 1.07948, and it also requires traders to buy in US dollars. Similarly, some platforms, in order to make it easier for traders to understand, mark the selling price as buying, which means that this price is the price at which traders can buy the currency pair.

The price difference between the buying price and the selling price is the “spread”. The buying price is higher than the selling price. The reason is that you need to buy and sell currencies from a foreign exchange broker. The broker provides a service for you, so you will charge a “service fee.” Look at the following example.

Suppose you have 1 Euro in your trouser pocket and there is no fluctuation in EUR/USD. You buy 1 Euro, sell 1.3041 US dollars, then sell 1 Euro, buy 1.3038 US dollars. This time, you will only have $1.3038 in your trouser pocket, which is $0.0003 less than the previous $1.3041.

The EUR/USD has not fluctuated, so where did the 0.0003 USD go? Quite simply, you paid a service fee of $0.0003 to the broker. The broker is really plucking hair, how does it make money, do you understand?