What is the bid-ask spread and why does it matter for every trade?
The bid-ask spread is the difference between the buy and sell price of a currency pair.
- Bid price: The price at which the broker/market is willing to buy the base currency from you (your sell price).
- Ask price: The price at which the broker/market is willing to sell the base currency to you (your buy price).
Example: EUR/USD is quoted as 1.0850 / 1.0853.
The spread here is 3 pips (1.0853 - 1.0850).
The spread is the hidden cost you pay the moment you enter a trade.
- You buy at the higher Ask price.
- You sell at the lower Bid price.
To break even, the market must move in your favor by at least the size of the spread.
Wider spreads = higher trading cost = you need bigger moves to profit. Tight spreads = lower cost.
The spread is the hidden cost you pay the moment you enter a trade.
- You buy at the higher Ask price.
- You sell at the lower Bid price.
To break even, the market must move in your favor by at least the size of the spread.
Wider spreads = higher trading cost = you need bigger moves to profit. Tight spreads = lower cost.
In Forex, the spread is your main transaction cost (especially for scalpers and day traders). Always check it before trading, it directly eats into your profits on every single trade.
In Forex, the spread is your main transaction cost (especially for scalpers and day traders). Always check it before trading, it directly eats into your profits on every single trade.
Bros youre the one asking the question and youre still the one answering it
Bros youre the one asking the question and youre still the one answering it
nice answer by the way