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Differences between the Foreign Exchange Market and Stock Market May 23, 2022
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Spread

Mira Team by Mira Team
January 15, 2021
in Forex Terms
Reading Time: 1 min read
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Definition – What does Spread mean?

The spread is the difference between the bid price and the ask price. The spread is represented in terms of pips. For example, if the EUR/USD has a bid of 1.3346 and an ask of 1.3348, then the spread is 2 pips.

ForexTerms explains Spread

The spread is how forex brokers get paid. Traders end up paying the spread to brokers when they make a trade. When the spread widens – that is, when it increases as measured in pips – the broker makes more money off each trade. However, brokers still make money when the spread is tight because of the overall volume of trades being made.

Sometimes a widening spread is merely the result of market conditions. However, if a trader continues to get bad fills of orders, it may mean that the broker is intentionally timing trades to maximize their profit.

ⓘ Mira FX is not liable for any damage or loss, including but not limited to, any loss of investment, which may be based either directly orindirectly on the use of or reliance on such information. Before deciding whether or not to take part in foreign exchange or financial markets or any other type of financial instrument, please carefully consider your investment objectives, level of experience and risk appetite.

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