Bid price

Every tradeable instrument carries two prices at once. The bid is what a buyer is prepared to pay, and the ask, also called the offer, is what a seller is prepared to accept. The bid is the lower of the two. A participant selling into the market deals at the bid and a participant buying deals at the ask, which is why a long position opens at the ask and closes at the bid, and a short position does the reverse.

How the bid is arrived at depends on the market's structure. On an order driven venue the bid is simply the highest price standing in the order book at that instant, with further bids beneath it at lower prices, which is what a depth of market window displays. On an over the counter market such as foreign exchange there is no single book, so the bid shown to a client is the provider's own price, assembled from the quotes its liquidity sources are showing and from its own risk position.

The detail that catches people is that most platforms draw the chart from bid prices. A long position therefore appears to open above the line on screen and a short position below it, and nothing has gone wrong when it does: the chart is drawing one side of a two sided quote, and the distance between the sides is the spread.