In forex trading, a spread is the difference between the bid price and the ask price of a currency pair. It is the cost of trading and is usually measured in pips, which is the smallest unit of the price movement of a currency pair. The spread is calculated using the last large numbers of the buy and sell price within a price quote. The size of the spread can be influenced by different factors, such as the currency pair being traded, the time of day a trade is initiated, and economic conditions. There are two types of spreads: fixed and variable. Fixed spreads are usually offered by brokers that operate as a market maker or "dealing desk" model, while variable spreads are offered by brokers operating a "non-dealing desk" model.

The spread is the primary cost of a currency trade, built into the buy and sell price of an FX pair. Most forex currency pairs are traded without commission, but the spread is one cost that applies to any trade that you place. Rather than charging a commission, all leveraged trading providers will incorporate a spread into the cost of placing a trade, as they factor in a higher ask price relative to the bid price. The spread can be narrower or wider, depending on the currency involved, the time of day a trade is initiated, and economic conditions.

Investors need to monitor a brokers spread since any speculative trade needs to cover or earn enough to cover the spread and any fees. Also, each broker can add to their spread, which increases their profit per trade. A wider bid-ask spread means that a customer would pay more when buying and receive less when selling. In other words, each forex broker can charge a slightly different spread, which can add to the costs of forex transactions.