"Transaction Costs"

I’m studying the lesson “Choosing a Forex Broker” (Pre-school). In the Broker Policies, there is a part said that"

“[B]Transaction Costs[/B]
Transaction costs are calculated in pips. The lower the number of pips required per trade by the broker, the greater the profit that the trader makes. Comparing pip spreads of half dozen brokers will reveal different transaction costs. [B]For example, the bid/ask spread for EUR/USD is usually 3 pips, but if you can find 2 pips, that�s even better[/B].”

[B]Can you give me a detailed example and explanation to see that the bid/ask spread for EUR/USD is 2 pips better than 3 pips?[/B]

Think about it this way. So either you bought (bid) euros or sold (ask) euros. So if you bought Euros you would have to turn around and sell them right? But say the difference between the big and ask is three pips. Meaning to get to break even on the position the price would have to move in your favor three pips. The way I like to think of it is that the spread is how much you are down from the start. So obviously a lower spread is better! Would you rather be down 2 pips on a position or 3 pips?

Do you understand? Sorry I suck at explaining things.

So, [B]if the quote for USD/CHF:1.4550/1.4553 is better than the quote for USD/CHF: 1.4550/1.4555[/B]. Is that right?

Absolutely correct.