What is a Spread?

Created by Christie Chrisostomou, Modified on Thu, 31 Jul at 10:40 AM by Junsuda Chaiwunna

When trading Forex you'll see two variables - the Bid and the Ask price. The Spread is the difference between these two.

Put simply:

The “bid” is the price at which you can SELL a base currency.

The “ask” is the price at which you can BUY a base currency.

In the below example, you'll notice that the bid is 1.1051 and the Ask is 1.1053 - the difference between these two is calculated in pips. In this case, it's 2 pips called the 'spread'.

Here is how the bid and ask differ:

? Sell Order - you will open at the Bid price and close at the Ask Price.
? Buy Order - you will open at the Ask price and Close at the Bid Price.