DEFINITION of Left-Hand Side

The term left hand side refers to the bid side in a two-way price quote. A two-way price quote denotes both the bid price and the ask price of a security. The left-hand side, or bid, indicates the price at which the dealer or market maker is willing to buy a security or currency, and the right-hand side, or ask, indicates the price at which the dealer or market maker is willing to sell the security or currency.

Two way pricing is a part of most financial asset pricing including currencies, equities, commodities and bonds. 


For example, in currency trading, a two-way price quote could be US$1 = 1.0500 / C$1.0510. The left-hand side or bid price of 1.0500 (Canadian dollars) denotes the price that the currency dealer is willing to pay for a U.S. dollar for Canadian dollars, while the right-hand side or ask price denotes the price at which the dealer will sell a U.S. dollar for Canadian dollars. The difference between the bid and ask prices is referred to as the spread.

A corporate entity that wishes to exchange U.S. dollars for Canadian dollars in the above example would therefore sell the U.S. dollars at the dealer's bid price or the left-hand side price, while one that wishes to exchange Canadian dollars for U.S. dollars would buy the latter at the dealer's ask price or right-hand side price.

Retail customers face much larger spreads than those shown in the above example. However, as the number of online brokers and increased price transparency these spreads are falling.