What is Bid-Ask Spread? - Definition & Explanation
Definition
The difference between the bid and ask price of a currency pair.
Bid-Ask Spread Explained
The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). It represents the primary transaction cost in forex trading. Major pairs typically have the tightest spreads (0.1-1.0 pips).
Related Terms
Bid Price
The price at which a broker will buy a currency pair from a trader.
Ask Price
The price at which a broker will sell a currency pair to a trader.
Spread
The difference between the bid and ask price, representing the broker's primary cost to the trader.
Commission
A fee charged by a broker per trade, separate from the spread.