The spread is the difference between the Buy (Ask) price and the Sell (Bid) price of a trading instrument.
It represents the cost of opening a trade.
How does the spread work?
When you open a trade, it starts with a small unrealised loss due to the spread
The market must move in your favour by at least the spread amount for the trade to break even
Example:
If EUR/USD is quoted as:
Buy (Ask): 1.1053
Sell (Bid): 1.1051
The spread is 2 pips.
The spread may vary depending on market conditions, liquidity, and the instrument being traded.
