: In the past topics we talked about what is forex and what is pip
Now we will talk about ..what is spread
The spread is the difference between the buy price(bid) and the sell price(ask). Two prices are given for a currency pair. The spread represents the difference between what the market maker gives to buy from a trader, and what the market maker takes to sell to a trader in the forex
If a trader bought any currency and immediately sells it and no change in the exchange rate has happened that mean the trader lost money. The reason for this is that the buy price is always lower than the sell price
For example, the EUR/USD bid/askcurrency rates at your bank may be 1.2025/1.3025. This represents a spread of 1000 pips. This spread is very high compared to the bid/ask currency rates for online Forex investors, such as 1.2035/1.2030 a spread of 5 pips
Anyways, smaller spreads are better for Forex investors because a smaller movement in exchange rates lets them profit from a trade more simply
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