Find out how Ask/Bid price, average price and stock quotes works on IQOption. It’s a basic understanding of trading rules.
Have you ever been confused by the stock 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 (Bid and Ask)
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 stock quotes Ask and Bid are the stock 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 stock 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 clicking on :
The operation is opened at the quote level current, 1.8589. This means that in order to close the transaction in profit, the Bid quotation at the time you close the transaction must be higher than the Ask price at the time the transaction was opened. Basically, you will have to sell the asset (close the transaction) for a higher price than the one you bought it for.
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 clicking on , your operation will open at the price and, to be able to close in profit, your closing price (the current one ) must be less than the Bid price at the time you opened the transaction.
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 stock 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 stock quotes.
If you wish to check the previous stock quotes, you can find the card on our website. Here you can set dates and times to check Bid, Ask and average prices that have been displayed on the platform.
These basic concepts are crucial for a trader and crucial to the success of your investments. A careful evaluation of the stock quotes will allow you to better understand the charts and plan your trading strategy accordingly.
According to Investopedia Bid – Ask is:
The bid price refers to the highest price a buyer will pay for a security. The ask price refers to the lowest price a seller will accept for a security. The difference between these two prices is known as the spread; the smaller the spread, the greater the liquidity of the given security.