Core terminology
Bid, ask and the spread
2 min
Every pair shows two prices at once:
- The bid — the price at which you can sell the base currency.
- The ask (or offer) — the price at which you can buy it.
The ask is always slightly higher than the bid. The gap between them is the spread.
The spread is a cost
The spread is effectively a fee you pay to enter a trade. The moment you open a position, you are down by the spread, because you bought at the ask and would have to sell at the lower bid. The price must move in your favour by at least the spread just to break even.
What affects the spread
- Liquidity — majors like EUR/USD have very tight spreads; exotics are far wider.
- Time of day — spreads widen in quiet hours and around major news.
- Account type — raw-spread/ECN accounts show tiny spreads but add a commission.
Always factor the spread into your plan, especially for short-term strategies where it is a large share of the target profit.
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