The idea of the spread!

Beginner Questions
1

i have gone through college and passed!! :smiley: however, the idea of the pips spread is not yet clear!. can you simplify the stuff for me. ??::smiley:

2

The bid is where the market is willing to buy. The ask/offer is where it’s willing to sell. The difference is the spread.

Does that clear it up?

3

In other words
Actually Spread is an options position established by purchasing one option and selling another option of the same class but of a different series.:slight_smile:

4

Alright…a simple example here.

Each currency has different pips spread and EUR/USD has one of the tightest spreads. Let’s say EUR/USD has a BID price of 1.2560 and ASK price of 1.2562.The difference between the price is 1.2562 - 1.2560 = 2 pips spread.

So if you want to buy EUR/USD, you will buy at the BID price of 1.2562, if you want to sell, you will sell at the ASK price of 1.2560. In other words, You will buy at a higher price and sell at a lower price, this is how brokers earn the spreads.

Hope this clarifies.

Regards,
Dan

5

thx i got it now :slight_smile: