I just realized that many people still don't truly understand spreads, which is very important if you want to trade Forex or digital assets effectively.

The spread is the difference between the selling price (Bid) and the buying price (Ask) of an asset, whether it's currency, stocks, or crypto. In Forex trading, you'll see two prices simultaneously, such as EUR/USD with a selling price of 1.05680 and a buying price of 1.05672. This difference is the spread.

Why should you care? Because the spread is the cost of trading. If you buy and close immediately, you'll incur a loss of 0.8 pips right away. The broker also profits from this difference. It's like buying gold at $500 and needing to sell at a profit, which means selling at $501 or higher. That difference is the spread.

Additionally, there are two other types of spreads you need to know: fixed spread and variable spread.

A fixed spread has the advantage that you can calculate your costs precisely, with no changes. But the downside is that during highly volatile market conditions, brokers will perform a Requote, which "blocks" our system until we accept the new price. Usually, the new price is worse than the previous one.

A variable spread fluctuates according to market conditions. Brokers do not set it. The advantage is that there are no Requotes, and during good liquidity periods, costs are often lower. The downside is that the spread can spike rapidly. For example, if you want to buy EUR/USD with a 2-pip spread, during an unemployment news release, the spread could suddenly jump to 20 pips.

Which one is better? It depends on each trader's style. Beginner traders who trade small amounts benefit more from fixed spreads. Larger traders who trade frequently and in large volumes, especially during market peaks, may find variable spreads more advantageous.

What you need to remember is that the more the spread fluctuates, the harder it is to make profits. So, try to choose popular currency pairs like EUR/USD or GBP/USD, as these usually have less spread fluctuation. Also, don't forget to select a broker with relatively stable spreads.

Once you understand spreads, planning your trading strategy becomes much easier because Forex trading is an investment that requires knowledge, not gambling. Those who truly understand the system will have a higher chance of success.