Definition of Bid Ask Spread

The bid ask spread is a term used by money exchangers. It is the difference between the buying and selling rate of a currency. The bid value is the price at which a money exchanger offers to sell the currency and the ask is the value at which the money exchanger will buy the currency.

Foreign exchange rates are normally quoted as:

The above chart is the USA based that shows the conversion rates for one USD. Buying and selling are mentioned with respect to the money exchanging agent. As a pet rule, it is considered that the money exchanger will have a beneficial position on each transaction. Assume that you want to exchange 300 AUD for USD. The exchanger will buy AUD at a lower rate (0.7562) and sell exchange USD for the equivalent amount. This way you will receive USD226.86 (300 x 0.7562).