Ask — Definition Explained Simply | Examples & Role
Ask is the price at which a bank, broker, or other market participant is willing to sell currency or securities to a client. In currency operations, the ask reflects the rate at which a bank or broker (the seller) sells foreign currency to a client.
Ask is the selling price of a financial asset (currency, stocks, bonds, etc.) on the market. In other words, it is the minimum price a seller is willing to accept at a given moment. In currency transactions, the ask reflects the rate at which a bank or broker sells foreign currency to a client.
The term is always used together with Bid, which indicates the buying price. The difference between ask and bid is called the spread and shows the cost of a transaction for the client as well as the level of market liquidity.
Ask in currency trading
On the Forex market, the ask shows the rate at which a trader can buy the base currency. For example, if the EUR/USD quote is 1.1000/1.1002, then 1.1002 is the ask price (buying euros for dollars), while 1.1000 is the bid price.
Importance for market participants
- For a bank client, the ask is the rate at which the bank sells currency to the customer.
- For a Forex trader, the ask is the price at which a buy order can be opened.
- The smaller the difference between ask and bid, the more favorable the trade for the client and the higher the market liquidity.
Examples
- EUR/USD quotation = 1.1000/1.1002 → ask = 1.1002.
- In a bank, the selling rate for USD (ask) is 96 RUB.
- On the stock exchange, a stock may be quoted at bid = 101.5 and ask = 102.0.