Offer price definition

What is the offer price?

The offer price is the price at which you – the trader – can buy the underlying asset from a broker or market maker. From the perspective of the market maker, the offer price is the price at which they are willing to sell the underlying.

The offer price is one of the two prices quoted when trading financial assets, the other being the bid price. The difference between the offer and the bid is called the spread – this is the fee traders pay to open positions. Therefore, the offer price is the slightly higher than the market price, while the bid price is slightly lower.

The offer price can also be called the ask price or the asking price. So, sometimes you might see the spread referred to as the bid-ask spread, instead of the bid-offer spread.

Learn how to trade stocks

Find out more about share trading, including how to build a trading plan and open a position.

Offer price examples

Let’s take a look at two examples of an offer price: one for shares and one for forex.

Say Barclays shares are trading at $148.760 with an offer price of $148.780 and a bid price of $148.740. You think the share price will rise, so you open a CFD to buy (go long on) five contracts at $148.780.

After a week, the share price has risen in your favour and is now trading at $151.760 with an offer price of $151.780 and a bid price of 151.740. To close your position and take your profit, you reverse the trade by selling your shares at the bid price.

Now, let’s look at the forex market. GBP/USD is trading at $1.32575 with an offer price of $1.3262 and a bid price of $1.3253. You believe that the GBP will strengthen at the next interest rate announcement, so you decide to buy five contracts at $1.3262 . Remember, when trading GBP/USD, you are buying GBP and selling USD at the same time.

After a week, GBP/USD rises to $1.33175 with an offer price of $1.3322 and a bid price of $1.3313 and you decide to close your position and take profit. You reverse your trade to close your position, so you sell five contracts at $1.3313.

Build your trading knowledge

Discover how to trade with IG Academy, using our series of interactive courses, webinars and seminars.

A - B - C - D - E - F - G - H - I - L - M - N - O - P - Q - R - S - T - U - V - W - Y

See all glossary trading terms

Contact us

Support line is available 24hrs a day from 8am GMT Saturday to 10pm GMT Friday

+65 6390 5118

You can also email us helpdesk@ig.com.sg

Visit our storefront office at 9 Battery Road #01-02 MYP Centre Singapore 049910

Please note that our storefront office will be temporarily closed from 7th April 2020 till further notice.