When entering the trading world, whether it's Forex or trading other assets, you probably hear the word "spread" very often. But what exactly is a spread and why is it so important? Let's understand it together.

First of all, the spread is the difference between the price the broker asks us to sell (Bid) and the price they ask us to buy (Ask). Whether trading Forex pairs like EUR/USD or GBP/USD, or even trading cryptocurrencies, there is always a spread. For example, if you see a Bid price of 1.05672 and an Ask of 1.05680, the difference (0.8 pips) is the spread.

Why is it important? Because the spread is the cost you pay every time you make a trade. If you buy EUR/USD and close the position immediately, you will lose exactly the amount of the spread in pips. This is how brokers make money, and it’s also why understanding the spread is essential for planning your trading strategy.

Looking at the spread also helps us assess the market’s liquidity. Under normal conditions, the Forex market usually has a relatively narrow spread, around 0.001%. But during major news events like NFP or when liquidity drops, the spread can widen rapidly. Sometimes it can jump to 1-2% or even more.

Regarding types of spreads, there are two main types you will find on trading platforms. The first is a fixed spread, where the broker sets a predetermined value that doesn’t change with market conditions. The advantage is that you know your costs exactly, but the downside is that during high volatility, brokers may issue a "Requote," which blocks the system and asks you to accept a new, often worse, price.

The second type is a variable or floating spread, which changes according to market demand and supply. Brokers do not set it; instead, they pass the prices directly from the market. The advantage is no Requote, and during high liquidity, spreads tend to be lower. The downside is that it’s not suitable for beginners because the spread can suddenly jump higher, turning a profitable trade into a loss.

If asked which is better, according to experts, it depends on your trading style. If you trade small amounts and want predictable costs, a fixed spread might be more suitable. But if you trade frequently and quickly, especially during market peaks, a floating spread can be more advantageous.

Finally, don’t forget to choose popular currency pairs like EUR/USD or GBP/USD, as these usually have lower and more stable spreads compared to less popular pairs. Understanding spreads well will help you plan your trading strategies effectively and reduce unnecessary costs.