The Bid-Ask Spread
FOREX prices are always quoted in the form of bid-ask-last trade. If you are a potential buyer, the ask is the price someone will sell to you. If you are a potential seller, the bid is what someone is willing to buy from you. You buy the ask and sell the bid in FOREX.
Market-maker brokers add their transaction costs to this bid-ask spread. By knowing how many pips are in the spread, you are able to calculate your costs for the trade, exclusive of any other factors such as slippage, commissions, or rollover costs.
[caption id="attachment_12972" align="aligncenter" width="561"] The Bid-Ask Spread[/caption]