Spread
The spread is the difference between the buy (ask) and sell (bid) price of a currency pair.
Quick Reference:
Gap between big and ask. Represents cost of transaction. Tighter spread reduces cost.
Expanded Explanation:
The spread is how most brokers earn money in the Forex market. When you buy a currency pair, you pay the ask price, and when you sell you receive the bid price. The difference between the two is known as the spread. For example, if AUD/USD is qouted as 0.6500/0.6502, the spread is 2 pips. Spreads can widen during times of low liquidity or high volatility, so monitoring them helps traders manage entry and exit timing effectively.