What is Spread?
Spread is a core concept in currency trading.
The difference between the Bid (selling) price and the Ask (buying) price quoted by a broker, representing the primary transaction cost of opening a trade.
Understanding Spread helps you manage your risk and spot high-probability trade setups.
Why It Matters for Forex Traders
In forex trading, Spread helps you protect your capital. It gives you a clear rule to follow instead of guessing.
How to Identify and Apply Spread
- 1Spot and mark Spread on your chart during active trading hours.
- 2Check that the overall market trend agrees with your trade idea.
- 3Always place a protective stop loss before entering any position.
Practical Forex Example
For example, on a EUR/USD trade, applying Spread allows you to set clear entry and exit points before risking real money.
PRO TRADER TIP
Always test strategies involving Spread on a free demo account first before trading with real capital.