In Forex, the “spread” is an important term you need to understand. Here’s a simple explanation:

  • What is a Spread?

The “spread” is the difference between the buying price (bid) and the selling price (ask) of a currency pair at any given moment. It’s like a kind of commission you pay to the broker for executing a trade. The spread is the broker’s profit.

Example:

If you see that the EUR/USD has a buying price of 1.1000 and a selling price of 1.0998, the spread is 2 “pips” (the difference between 1.1000 and 1.0998).

  • How Spread Affects:
    • A wider spread means you’re paying more to enter a trade.
    • A narrower spread is better, as you pay less to trade.