What is Spread in Forex
The spread in forex is the difference between the bid and ask price of a currency pair. For instance, if the EUR/USD bid is 1.1050 and ask is 1.1052, the spread is 2 pips. This cost is incurred every time you open and close a trade. Spreads can be fixed (constant regardless of market conditions) or variable (fluctuating with liquidity and volatility). For Tunisia traders focusing on USD pairs like USD/TND or EUR/USD, variable spreads are common during major news events or low-volume hours. A typical spread for EUR/USD might be 0.5-1 pip with a reputable broker, while exotic pairs like USD/TND can have spreads of 10-20 pips due to lower liquidity. How does this affect you? If you trade 1 standard lot (100,000 units) of EUR/USD with a 1-pip spread, your cost is 10 USD. Trade 10 times a day, and you’re paying 100 USD in spreads alone. For Tunisia traders using Skrill or USDT, where deposit fees may be 1-2%, these costs compound. To minimize spreads, trade during peak hours (London/New York overlap) and use brokers regulated by the local financial authority. Also, consider commission-based accounts for tighter spreads if you trade large volumes. Remember, the spread is not just a number—it’s a real cost that impacts your bottom line in Tunisian dinars or USD.