📖 Financial Lexicon Term
What is Spread?
The difference between the bid and ask price. This is the primary cost of trading with most brokers. Measured in pips (e.g., 0.8 pips on EUR/USD).
Detailed Explanation
The Spread represents the transaction markup applied by brokers. In standard commission-free accounts, the broker widens the gap between the wholesale interbank bid and ask price to secure their operating revenue.
💡 Practical Trading Example
If the EUR/USD ask is 1.0801 and the bid is 1.0800, the spread is 1 pip (0.0001).