What is the meaning of spreads in forex trading exchange

A:First, remember that in the forex markets investors trade one currency for another. Take a trip to France and you convert your pounds into euros. One way of looking at the general structure of any Forex trade is that all trades are conducted through middlemen who charge for their services. An exchange rate, applied to a customer willing to purchase a quote currency is called BID. It is the highest price that a currency pair will be bought.

And a price of quote currency selling is called ASK. BID is always lower than ASK. The difference between ASK and BID is called spread. It represents brokerage service costs and replaces transactions fees. What Is A Spread In Trading Forex Currencies. Traders and investors call this the Bid or Ask spreads. This is the simple meaning of Spreads in Forex trading.

Companies require foreign exchange for paying for goods in another currency and dealing with international employees. In the Forex market, the value of currency is given in pips. One pip equals 0.0001, two pips equals 0.0002, three pips equals 0.0003 and so on.One pip is the smallest price change that an exchange rate can make. Most currencies are priced to four numbers after the point.

Two prices are given for a currency p.

What is the meaning of spreads in forex trading exchange

Forex spreads what is the meaning exchange of trading in