5 min read
Have you ever been confused by the quotes that are used when you open and close operations? If you've ever wondered why the operation was opened above or below the line you see on the chart, this article is for you. Let's clarify the question once and for all!
Offer and demand
First of all it is essential to know the Bid and Ask prices that are at the base. The asking price, or Ask, is the price you buy an asset for. The bid price, or Bid, is the price at which the asset is sold. The quotes Ask and Bid are the quotes to which you open your operations with CFD on the IQ Option platform. The difference between the Ask and Bid prices is called Spread.
You can enable the display of Ask and Bid quotes in the settings menu, and here's how they would look like:
So, how does it work? Let's see an example.
Let's say you open an operation on GBP / USD, on the Forex tab. Your prediction is that the price will go up, so open a position
The operation is opened at the quote level
That said, remember that with IQ Option you do not really get hold of the asset, but you make a profit by investing on the price trend.
In case you expect a price drop and open a position
So far it's quite simple. So, what is it that normally sees on the chart? The white line with a strange value, which does not match the Bid price, nor the Ask price, reflects the average price. The average price is calculated with the formula (Ask + Bid) / 2 and is shown on the chart to offer you greater convenience. For the same reason, on the platform you will see 6 figures after the decimal point: it is the result of the division.
Compare the quotes
Very often traders notice a difference in quotations, but it is important to know how to compare them correctly. When comparing prices with other platforms or exchange rates, be sure to compare the Ask and Bid prices and not compare, for example, the Ask price with the average price of our platform.
If you are sure to compare the correct prices and the prices do not match, remember that they may be different, since the platforms often have different suppliers for quotes.
If you wish to check the previous quotes, you can find the card
These basic concepts are crucial for a trader and crucial to the success of your investments. A careful evaluation of the quotes will allow you to better understand the charts and plan your trading strategy accordingly.
This article does not represent an investment advice. Any reference to past movements or price levels is informative and based on external analyzes, we do not provide any guarantee that these movements or levels may re-appear in the future. In accordance with the requirements set by the European Securities and Markets Authority (ESMA), trading with binary and digital options is only available to customers categorized as professional clients.
GENERAL INFORMATION ON RISKS:
CFDs are complex instruments and carry the high risk of losing money quickly due to the leverage effect. 73% of retail investor accounts lose money when trading with CFD through this provider. You should make sure you understand how CFDs work and if you can afford to take the high risk of losing your money.
Source: IQOption blog 2018-12-03 15:23:14