What is a Spread?

A spread refers to the difference between the buying (ask) price and the selling (bid) price of a currency pair. It represents the broker’s fee for executing the trade, outside of any official transaction charges.

Why are Spreads Important?

Cost of Trading: The spread essentially defines the initial cost of a trade. A narrower spread means you’re starting with a smaller initial loss.

Trading Strategy: Depending on trading style, such as scalping, the size of the spread can significantly impact profitability.

Market Conditions: Spreads can widen during major news events or low liquidity periods. Knowing this helps in making informed trading decisions.

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