Mid-Price (Middle Rate)
The average of the bid and ask prices, used as a reference point rather than an executable price.
The mid-price is the midpoint between bid and ask, the theoretical fair value of an instrument. You cannot trade at it; it is used for valuation and comparing quotes.
The mid-price is calculated by taking the midpoint between the best available bid and ask prices. It represents the theoretical fair value of an instrument at any moment. You cannot trade at the mid-price because real transactions occur at the bid (selling) or ask (buying). It is used for valuation, performance measurement, and comparing quotes across brokers.
How It Works
- Calculated as (bid + ask) / 2
- Portfolio valuations and mark-to-market calculations use mid-price to avoid bid-ask bias
- The distance from mid-price to bid or ask equals half the spread
- Financial news providers often quote the mid-price when displaying exchange rates
Trading Tips
Use mid-price to compare execution quality. Getting filled closer to mid than the quoted ask means good execution.
Unrealised P&L may show mid-price, but closing the trade costs you half the spread
A tighter spread means the mid-price is closer to where you actually trade
Related Terms
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