In Forex trading, you can buy or sell a currency. To do so, you place a bid and ask price. The bid price is the lowest price that a seller will accept to sell their currency. It is usually displayed to the right, in blue. The ask price is always higher than the bid price. The cost of trading is called the spread, and a narrower spread means it is cheaper to trade. A wider spread, on the other hand, means that you will have to pay more for each trade.
When you trade in the currency market, you can use many different trading strategies. For example, if you believe that the Euro is about to weaken against the US dollar, you can buy it at USD 1.1916 and sell it for USD 1.2217. This strategy is known as a short sell. You should only open a short sell position if you don’t believe that the value of the currency will go up.
The spread in forex trading is the difference between the bid and ask prices. For example, in the EUR/USD currency pair, the spread is 0.0002. You’ll want the market price to rise above the bid price and fall below the ask price. Whether you’re buying or selling, you’ll want to pay attention to this spread, because the difference between these two values can be huge.
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