Spread

The Spread in foreign exchange (FX) trading is the fundamental transaction cost, defined as the difference between the bid price (the price at which a broker will buy the base currency from a trader) and the ask price (the price at which a broker will sell the base currency to a trader), typically measured in pips. This bid-ask spread is the primary way market makers and liquidity providers generate revenue from facilitating trades, and its size is a direct indicator of a currency pair's market liquidity and volatility.