In trading, the spread refers to the difference between the ask price (the price at which you buy) and the bid price (the price at which you sell) of an asset. It’s a fundamental concept that directly affects your trading costs.
How Spread Is Calculated
The formula is straightforward:
Spread = Ask Price – Bid Price
For example, if EUR/USD is quoted with a bid price of 1.1050 and an ask price of 1.1052, the spread is:
1.1052 – 1.1050 = 0.0002 (or 2 pips)
Why It Matters
Spreads are effectively the cost of entering a trade. Lower spreads mean lower costs, especially for short-term strategies like scalping. At Bullwaves, we offer competitive spreads across all asset classes to give you better control over your trading performance.