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I just realized that many of you still don't fully understand what spread is in trading, especially when starting to learn about forex or crypto. Today, I will explain it simply.
What is forex spread? To put it simply, it is the difference between the bid price and the ask price. Imagine you're at a market, the seller says "I sell apples for 100 rubles," but the buyer says "I only buy for 90 rubles." That 10-ruble gap is the spread.
The interesting thing about the spread is that it reflects the liquidity of the asset. When the spread is small, meaning the buy and sell prices are close, you can trade easily and quickly. Conversely, a large spread makes it harder to find a counterparty, and prices can fluctuate sharply.
Spread isn't just present in forex; it also exists in stock markets, cryptocurrencies, and other trading platforms. In fact, exchanges make money from this spread — they buy at a low price and sell at a higher price, and the difference is their profit.
Looking at coins like XRP, BNB, or ORDI, you'll see that their spreads vary depending on liquidity. That's why you need to choose a trading platform with a reasonable spread if you want to trade effectively.