If you are only now entering the world of Forex trading and investing, the entire concept might seem extremely complicated and pretty much like a complete blur. So, learning what every concept concerning trading means is mandatory if you want to get involved in these kinds of activities. In this article, we will be talking about what is a spread in Forex trading and what you should know about it.

In Forex trading, a spread represents the difference between the sell price and the buy price or a certain currency pair. These are also called the bid price and the ask price. The first one represents the price at which you can sell the base currency, meaning the first one in the pair. The latter is the price at which you can buy the base currency. The second currency in the pair is always shown on the right and it’s also known as counter currency, quote, or variable. There is also a clear rule according to which the buy price will always be higher than the sell one. The market price is always somewhere in between those two.

About spread in Forex trading

It’s important to note that even if most currency pairs can be traded without any commissions, the spread must always be paid. This is why, most of the time, brokers include the spread price into the actual cost of trading. When it comes to the size of a spread, it can vary depending on multiple factors. It depends on the currency pair that you are trading, its volatility, the trading provider, or how large or small your trade is.

More details on spreads

A spread in Forex is measured in pips which represents a unit of movement when it comes to the price of a certain currency pair. The pip is the last decimal point in the price, like 0.0001, for example. This applies to all currencies apart from the Japanese Yen which has as pip the second decimal point in the price, like 0.01.

In trading, spreads can be fixed or variable and certain assets have any of those two. For example, indices always have fixed spreads while Forex always has variable spreads. Knowing those details is crucial if you want to start Forex trading soon.

However, if you are now at the beginning of your journey, we can safely recommend an online broker called AlphaFXC Trading to help you out.

AlphaFXC Trading offers traders of all sorts, from newcomers to seasoned, a wide range of different trading sites that have been uniquely designed to satisfy the special requirements and desires of the customer. This broker gives its clients over 1,000 Forex and CFD instruments to work with, like cryptocurrencies. They pledge that the lowest trade commission is just 0.87 percent. In addition, according to their online webpage, traders can rely on this broker to ensure a high degree of protection when it comes to their capital. All web-based actions are encrypted through a high-end program. Check out their official web page for more details on their offer and advantages for beginners.