Spreads are the cost of trading in any market that you can trade with us. Find out more about forex spreads, including how they are calculated and what they mean.
What is the forex spread?
Spread in forex refers to a small cost that is added to the buy (bidd) and sell (ask), prices for every currency pair trade. If you examine the quoted price for a currency pair you’ll see that there is a difference in the buy and sale prices. This is called the spread, or the bid/ask spread.
The spread is measured in small price movements, or pips. This refers to any change in the fourth place of a currency pair, or the second place for trading pairs that are quoted in JPY. The spread is only one factor that determines the cost of your trade. It also affects the size of the lot.
Forex trades involve buying and selling one currency pair. The base currency is the currency shown on the left, while the quote currency is the one on right. The bid price refers to the price of purchasing the base currency and the ask price refers to the price of selling it.
Video Source : The Trading Channel
You can trade forex with us 24 hours a days using derivatives such as spread bets or CFDs. You can take a position in forex using derivative products without having to own the underlying asset. You can trade long or short. This allows you to speculate on both rising and falling currency prices. To open a position, you will only need to make a small deposit (called margin).
Margin on forex trades is typically 3.33% of trade value. This means that you can increase your capital while still being exposed to full trade value. Margin can increase your profits but it will also magnify any losses.
How to calculate forex spread
The spread in forex is calculated by subtracting the buy price from the sell price in pip. This is done by subtracting the ask price from the bid price. If you trade GBP/USD at 1.3089/1.3091 the spread would be 1.3091 – 1.3089. This is 0.0002 (2 pip)
“Trading is not for the dabblers, the dreamers, or the desperate. It requires, above all, one steadfast trait of dedication. So if you are going to trade, trade like you mean it”
Forex trading platforms
You have a variety of forex trading reviews platform available, including our award-winning platform MT4 and an MT4 VPS. All of these platforms will display the forex spreads upfront.