Assume the price of Apple stock is $130.50, with an offer price of $130.60 and a bid price of $130.40. You believe the price will fall, so you open a CFD to short - or sell - five contracts at $130.40. After a few days, the share price has dropped to $127.40, with a bid of $127.20 and an offer of $127.60.

In this case, your decision to go short resulted in a profit, and you could close your position. To accomplish this, reverse your trade and purchase five contracts at the current offer price of $127.60.

Consider the EUR/USD pair, which is currently trading at $1.2450, with an offer price of $1.2480 and a bid price of $1.2420. Given the Federal Reserve's recent interest rate announcement, you decide to short this pair on the assumption that its value will fall.

As a result, you decide to open a CFD position at $1.2420 to sell five contracts. After a few days, the EUR/USD has dropped to $1.2220, with a bid of $1.2190 and an offer of $1.2250. You decide to take your profit by reversing your trade and buying five EUR/USD contracts at $1.2250 to close your position.

A bid price is the highest amount a buyer is willing to pay for a security or asset. For example, in the stock market, if Company XYZ's shares are trading at $50 and an investor wants to buy them for $49, $49 is the bid price. In real estate, a house listed at $300,000 might receive a bid price of $290,000 from a potential buyer. In auctions, an antique might have a starting bid price of $1,000, with bidders increasing their offers until the highest bid wins. In foreign exchange markets, if the EUR/USD pair is quoted at 1.2000/1.2005, the bid price is 1.2000, indicating the price at which the market maker will buy euros.