To come to the definition of the spread, let’s start with bid and ask prices.
You definitely met these terms when exchanging money in the bank. Have you noticed that one price is higher and the second is lower? The lower price is at which the bank buys the currency from you and the higher one is at which it sells the currency to you. The difference between these two prices is called spread. Spread is revenue that a bank gets from the foreign exchange operations it performs for a client.
FX spread works similarly. To enter the forex, you need a broker who will carry out your operations. Will it do it for free? Of course, not. The commission you will pay a broker is called spread.
When trading with FBS, you can apply to different types of spread: floating, fixed, and no-spread. The type depends on the trading account you choose.
The fixed spread is the best option for traders because they always know how much they will pay for a trade.
The floating spread is the spread that changes all time depending on the market conditions and supply-demand issue.
No-spread or 0 pip spread is an option to trade without the spread. Instead, you will pay a commission.
2020-09-15 • Updated