Forex Spread Definition

The Spread in Forex and CFD trading is quite simply the difference between the Bid and the Ask Price. If you subtract the Ask price from the Bid Price you get the spread. This is considered a cost in trading because there is almost always a gap between these two prices and when you trade you enter the position with one price and exit with the other. This means even if there are no commissions or any other trading costs and you open and immediately close before there is any price movement, there will be a loss if there is a spread. In order for a Buy position to be profitable, you need to wait for the Ask price to be greater than the price you entered the position at. This is because when you exit the position you will need to Sell to close.

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