Bid Ask Spread – Free Forex trading course for beginners – Part 11
Today, we will continue our journey in the forex world. In the previous two posts, we understand the definition of both forex pips and bid/ask quotes. Now, we are going to discover the meaning of the Bid/Ask spread. Simply, the bid-ask spread is the difference between the bid price and the ask price. Let’s take an example to clarify the meaning of this phrase.
Let’s say that the bid price for the JPY/EUR is 1.3648 and the ask price is 1.3652 then this is a spread of four pips.
Remember, the quotes of the forex market are changing in every nanosecond, and the spread is also changing in every nanosecond. Usually, when the market is very active the spreads will be around two pips and when the market is not active the spread may reach four pips.
You must pay attention to the spread number while you are trading in the forex world. A smart trader should trade only when the spread number is around two while a failure trader trade when the spread number is around four.
That’s it for today. You should be ready because in the next post, we are going to discover the true meaning of the forex leverage and margin.
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