Bid & Ask Price
The bid price is the highest price a buyer is willing to pay for an asset; the ask (or offer) price is the lowest price a seller will accept. The difference between them is the spread.
When you open a position, you always trade at a slight disadvantage to the mid-price: you buy at the ask (higher) and sell at the bid (lower). This means every trade starts slightly below break-even, with the spread being the immediate cost of execution.
In a liquid market like EUR/USD, the bid-ask spread may be just 0.1–0.5 pips. In a thinly traded exotic pair or during a news event, the spread can widen to several pips or more. This widening reflects the increased risk that market-makers take on in providing liquidity.
The mid-price — the average of bid and ask — is what you typically see quoted in charts and news. The actual trade prices are always slightly worse than the mid-price, which is why comparing broker spreads matters for active traders.
Market makers (banks, prime brokers) provide liquidity by continuously quoting bid and ask prices. ECN (Electronic Communication Network) brokers aggregate quotes from multiple liquidity providers, often producing tighter spreads with a small commission per lot rather than a wider mark-up.