Spread

What is a Spread in Trading?

A spread in trading is the difference between the Bid price and the Ask price of an asset. For example, if EURUSD shows:

Bid price: 1.10201 Ask price: 1.10191 The spread is 0.00010.

In simple terms, the spread is the “gap” between what you pay to buy and what you receive if you sell immediately.

Why Spreads Matter

The spread in trading is important because it tells you the cost of entering a trade. A lower spread means it’s cheaper to trade, while a higher spread means it’s more expensive.

When you open a position, you’ll notice you start with a tiny loss; that’s the spread. Once the market moves in your favor, you can overcome this cost and start seeing profit.

Types of Spreads

• Fixed spreads: These stay the same, even if the market is very busy.
• Variable spreads: These can change depending on market conditions, such as big news or heavy trading times.

Both are common in trading, and each has its advantages.