what is a spread in forex trading

Currency pairs play a big role in currency conversion, especially when trading foreign exchange online. As a result of the US dollar's gold standard, which was abolished along with the expansion of numerous other nations' economies into the global economy, cross-currency pairs became necessary. Cross-currency pairs enable efficient currency trading without referencing the US dollar. From a trader's perspective, spreads are essentially the transaction costs involved in executing a trade. They represent the compensation that brokers receive for facilitating trades and providing access to the forex market. As such, traders should always consider spreads when evaluating potential trades, as narrower spreads can lead to lower transaction costs and higher profits. The Forex spread is a transaction fee representing the gap between buying and selling prices. When exchanging currencies, like at a bank, the selling price is higher than the buying price, creating a gap called the spread.  Exchanges use the BID (selling price) and ASK price (buying price) to indicate currency demand and supply.

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