The spread is the small difference between the buying price and the selling price of an asset.
The spread is the gap between the price at which you can buy an asset and the price at which you can sell it at the same moment. It represents a basic cost of trading — when a trade is opened, it usually starts at a small disadvantage equal to the spread. Spreads can be wider or narrower depending on the asset and on market conditions: highly active markets tend to have tighter spreads, while quieter or more volatile ones can have wider spreads. Being aware of the spread helps traders understand the true cost of entering and exiting a trade.
Think of a money changer at the airport. They sell you foreign currency at one rate and buy it back at a slightly worse one — and they keep the small difference. The spread in trading is that same gap: the small difference between the buy and sell price.
Knowing the words is step one. Learn the Smart Hedging System in our free session.
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