In forex trading, the spread refers to the difference between a forex broker's sell rate and buy rate when exchanging or trading currencies
. It is essentially the cost of trading and is calculated as the difference between the ask price and the bid price. The spread can be influenced by factors such as the currency pair being traded, market volatility, and the size of the trade
. Brokers can offer different types of spreads, including fixed and variable spreads, and a good spread is typically between zero to five pips
. A tight spread, or a narrow spread, is when the difference between the ask price and the bid price is small, and it is generally beneficial for forex traders
. The spread is an important factor to consider when trading, as it can impact the cost of a trade and ultimately the profitability of a trading strategy.
