Spread

The spread is the difference between the buy and sell (bid and ask) price in a market.

In the Forex market the spread is smaller between the major currency price than more exotic currency pairs.

In the Forex market the bid and sell price are set by the broker and most often includes the commission for the trade.

The broker may change the spread depending on which time of the day it is. At some times during the day or night there may be times which little trading and liquidity and the broker may increase the spreads during those hours.

The spread is usually measured in pips, which is the smallest unit of price movement of a currency pair. For most currency pairs, one pip is equal to 0.0001. An example of a 4 pip spread for EUR/USD would be 1.1051/1.1053. This quote indicates a spread of 2 pips.

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