NOTICIAS FOREX

Slippage is the difference between the price you expect a trade to be executed at and the price it actually fills at. In forex trading, slippage happens because prices move constantly and liquidity can change in milliseconds, especially during volatile market conditions. Slippage can be positive or negative, meaning it may either improve your execution price or make it worse than planned. It occurs across all financial markets, forex, indices, stocks, and crypto, and is a completely normal part of how markets function. This matters because even small execution differences can quietly eat into profits or increase losses over time, particularly for active traders or those trading around news events. What Is Slippage in Trading? The term “slippage” refers to the change in execution price between the moment an order is placed and when it is filled by the market. In simple terms, you ask for one price, but the market gives you another. In forex trading, slippage occurs because currency prices are constantly updating as buy and sell orders are matched. If the price you requested is no longer available, even by a fraction of a second, your trade will be filled at the next best available price. Slippage is most noticeable during periods of high volatility or low liquidity, but it can happen at any time. For this reason, slippage is not a broker trick or a system failure, it is a natural consequence of how live markets operate. Key characteristics of slippage: It affects both entries and exits It can be positive, negative, or neutral It occurs more often during fast markets It cannot be fully eliminated, only managed As a result, understanding slippage is essential for realistic trade planning and risk management. Types of Slippage In forex trading, slippage generally falls into three categories: positive slippage, negative slippage, and no slippage. A small amount of slippage is a natural market phenomenon because bid and ask prices are constantly changing as orders flow through the market. In simple terms, slippage occurs when the price available at the time of execution is different from the price you requested. Whether this difference works for or against you depends entirely on market conditions at that moment. This matters because traders often focus only on negative slippage, when in reality slippage can sometimes improve execution as well. Positive Slippage Positive slippage occurs when a trade is executed at a better price than expected. In forex trading, this typically happens when price moves in the trader’s anticipated direction between order placement and execution. For example, you place a buy order on EUR/USD at 1.1000, but due to a quick dip in price, the order fills at 1.0997 instead. You enter the trade at a better price without doing anything differently. Positive slippage usually occurs during fast markets where liquidity briefly improves or when price momentum works in your favour. For this reason, slippage isn’t always something traders should fear. Negative Slippage Negative slippage happens when a trade is filled at a worse price than expected. This is most common during periods of high volatility, thin liquidity, or sudden market moves against your position. For instance, you place a stop-loss at 1.1000, expecting to exit there, but a sharp price move causes the order to fill at 1.0990 instead. The trade loses more than planned, even though the stop was placed correctly. Negative slippage matters because it increases risk beyond what was calculated when the trade was entered. No Slippage No slippage refers to situations where the execution price exactly matches the requested price. While this is the ideal outcome, it is less common during active market conditions. No slippage is most likely to occur during high-liquidity sessions, calm market environments, or when using limit orders instead of market orders. Think of it as getting exactly what you ordered, possible, but not guaranteed in a fast-moving market. Order-Based Slippage Different types of orders experience slippage in different ways. The way an order is executed, not just market conditions, plays a major role in how much slippage a trader experiences. Market Order Slippage Market orders are filled at the best available price, not a guaranteed price. If the market moves quickly, the execution price may differ from what the trader expected. Stop-Loss and Take-Profit Slippage Stop-loss and take-profit orders are triggered as market orders. During volatile conditions, they may be filled several pips away from their trigger level. Limit Order Slippage Limit orders avoid slippage by specifying a price, but the trade may not be filled at all if the market never reaches that level. Weekend Slippage Weekend slippage occurs when markets reopen after a price gap caused by news or events while the market was closed. Orders are filled at the first available price, not the previous close. As a result, traders should choose order types based on both strategy and execution risk. Expected vs Unexpected Slippage Slippage can be divided into two broad categories: expected slippage and unexpected slippage. The key difference is whether the trader could reasonably anticipate the risk before placing the trade. Expected slippage occurs during known high-risk periods, such as major economic data releases or low-liquidity trading hours. Unexpected slippage, on the other hand, happens when the market moves suddenly without warning. Read more：Best time to trade forex: When to enter the market during the day This matters because traders can plan for expected slippage, but unexpected slippage is where most “what just happened?” moments come from. Expected Slippage Expected slippage refers to execution price differences that occur during predictable market conditions. In simple terms, you know the risk is there before you click the button. Examples include trading during major news releases, entering trades during thin Asian-session liquidity, or placing market orders during fast-moving markets. In these situations, some loss of price precision is normal and should be factored into the trade plan. For this reason, expected slippage is a cost of doing business rather than a trading mistake. Unexpected Slippage Unexpected slippage occurs when price moves sharply without prior warning. This type of slippage is usually larger and far more damaging to risk calculations. It often happens due to surprise headlines, geopolitical events, sudden market gaps, or technical issues at the exchange or liquidity-provider level. Traders are caught off guard, and stops may fill far away from their intended level. This is why unexpected slippage represents a higher execution risk and can lead to losses well beyond what was originally planned. Common Causes of Unexpected Slippage Major economic data surprises Geopolitical events or emergency announcements Weekend or session-open gaps Low-liquidity market conditions Technical or exchange-level disruptions Read more： forex News Expected vs Unexpected Slippage Comparison Category Expected Slippage Unexpected Slippage Definition Anticipated execution deviation Sudden, unforeseen execution gap Typical Size Small to moderate Moderate to severe Cause News, volatility, thin liquidity Shocks, gaps, system issues Market Conditions Known high-risk periods Abnormal or sudden moves Order Types Affected Market & stop orders All order types Risk Level Manageable High When It Happens Scheduled events Without warning Impact on Traders Reduced precision Increased losses As a result, professional traders treat expected and unexpected slippage very differently in their risk management. How Does Slippage Work? Slippage works because markets do not guarantee prices, they match orders. When you place a trade, your order is sent to the market to be filled at the best available price at that moment. If your requested price no longer exists due to rapid price movement or insufficient liquidity, the order is filled at the next available level. The faster the market moves, the greater the chance that your intended price disappears before execution. To put it simply, slippage is not about getting a “bad fill”, it’s about the reality of trading in a live, constantly moving market. What Causes Slippage? Slippage is caused by a mismatch between the price a trader requests and the prices actually available in the market at that moment. This usually happens when price moves faster than orders can be filled, or when there isn’t enough liquidity at the desired level. In simple terms, if nobody is willing to trade at your price, the market moves on without you. The order still gets filled, just not where you hoped. Understanding the root causes of slippage helps traders anticipate when execution risk is highest. High Volatility High volatility is one of the most common causes of slippage. During volatile conditions, prices can jump multiple levels in a fraction of a second, leaving no time for orders to fill at the requested price. This typically occurs around major economic news releases, central bank announcements, or surprise headlines. Even a well-placed stop-loss can suffer slippage if price accelerates too quickly. This matters because volatility-driven slippage is unavoidable once price starts moving aggressively. Low Liquidity Low liquidity means fewer buyers and sellers are available at each price level. When liquidity is thin, even small trades can push price to the next level, resulting in slippage. This is most common during off-peak trading hours, holidays, or late-session periods. Importantly, price does not need to move far for slippage to occur, it simply needs to move where no orders exist. For this reason, traders often experience slippage even in relatively quiet markets. Market Gaps Market gaps occur when price jumps from one level to another without trading in between. When this happens, stop-loss orders are triggered as market orders and filled at the first available price. This can result in significant slippage, especially after weekends or unexpected news events. Crucially, this type of slippage is completely unavoidable, there is no price to fill at in between. This is why holding trades over the weekend always carries additional execution risk. Order Type Different order types expose traders to different slippage risks. Market orders accept any available price, making them the most vulnerable to slippage. Stop orders convert into market orders once triggered, which is why stop-loss slippage is so common during fast markets. Limit orders avoid slippage entirely, but at the cost of potentially missing the trade. As a result, order selection plays a major role in execution quality. Spread Widening Spread widening occurs when the gap between the bid and ask prices increases sharply. This often happens during periods of high volatility or low liquidity. When spreads widen, execution prices can shift dramatically, even if the underlying price hasn’t moved much. Traders may experience slippage simply because the tradable prices have changed. This is why slippage and spread widening often go hand in hand. Read more:What Is the Spread in Forex? Learn to Calculate and Trade It Examples of Slippage in Trading The most common way slippage occurs is when a trader uses a market or stop order during fast-moving market conditions. In these situations, the price the trader sees on the chart may no longer be available by the time the order reaches the market. In practice, slippage is more often unfavourable than favourable, particularly when exiting trades under pressure. However, positive slippage does occur and is simply less talked about. Slippage During a News Release A trader places a stop-loss on EUR/USD ahead of the Non-Farm Payroll (NFP) report. The stop is set at 1.1000, and the trader expects to exit there if the trade goes wrong. When the data is released, price spikes sharply and gaps through multiple levels. The stop-loss is triggered but fills at 1.0985 instead. The trader loses more than planned, even though the stop was placed correctly. This is a classic example of volatility-driven negative slippage. Positive Slippage on Entry A trader places a market buy order on GBP/USD at 1.2500 during an active London session. As the order is being executed, price briefly dips due to a large sell order entering the market. The trade fills at 1.2497 instead of 1.2500. The trader starts the position with a slightly better entry, gaining positive slippage without intending to. This example shows that slippage isn’t always harmful, it’s simply part of live market execution. Weekend Slippage A trader holds a position over the weekend with a stop-loss set at 1.2000. Over the weekend, unexpected geopolitical news breaks. When the market opens on Sunday night, price gaps down and the stop-loss fills at 1.1950. The loss is significantly larger than planned, despite proper risk management during the week. This illustrates why weekend slippage is one of the most dangerous forms of execution risk. As a result, slippage should always be treated as a probability, not an exception, especially during high-risk market conditions. When Does Slippage Occur? Slippage tends to occur during specific market conditions rather than randomly. While it can happen at any time, certain periods consistently produce higher execution risk. Understanding when slippage is most likely allows traders to adjust position size, order type, or avoid trading altogether. High-Impact News Releases Slippage is extremely common during major economic announcements, particularly when results differ from market expectations. Common slippage-heavy events include: Non-Farm Payrolls (NFP) CPI inflation reports GDP releases FOMC statements and interest rate decisions Central bank press conferences These events cause sudden volatility, spread widening, and rapid price jumps. Market Open or Close At market open and close, liquidity can be uneven and spreads unstable. Orders placed during these times may be filled at unexpected prices, especially if markets open with a gap. Low-Liquidity Trading Sessions Slippage is more likely during quiet trading sessions, such as late U.S. hours or holiday periods. Fewer participants mean fewer prices available to trade at. Order-Based Slippage Certain order types are naturally more vulnerable: Market orders: No price protection Stop orders: Convert to market orders when triggered Take-profit orders: Can slip during sharp reversals Stop-loss orders: Particularly vulnerable during gaps This is why execution risk should always be considered when choosing how to enter or exit a trade. How to Avoid Slippage While slippage can never be eliminated entirely, traders can take several steps to reduce how often it occurs and how severe it becomes. The goal isn’t perfect execution, it’s damage control. In simple terms, slippage is about when you trade, what you trade, and how you place orders. Get those three right, and slippage becomes an occasional inconvenience rather than a regular account killer. Avoid Trading During High Volatility High-impact economic news is one of the biggest causes of slippage. During these moments, spreads widen, liquidity thins, and prices jump multiple levels in seconds. Events such as NFP, CPI, GDP releases, and central bank decisions are prime examples. Traders who insist on trading during these periods must accept a higher execution risk. For this reason, using an economic calendar and staying out of the market during major announcements is one of the simplest ways to reduce slippage. Choose High-Liquidity Markets High-liquidity markets generally offer better execution and tighter spreads. Major currency pairs such as EUR/USD, GBP/USD, and USD/JPY tend to have more participants and deeper order books. Trading during active sessions, particularly the London and New York overlap, also improves execution quality. This matters because liquidity, not volatility, is the trader’s best friend when it comes to slippage. Use Limit Orders Instead of Market Orders Limit orders allow traders to specify the exact price they are willing to trade at. This removes slippage entirely, but it introduces a new risk: the trade may not be filled. Market orders guarantee execution but not price, while limit orders guarantee price but not execution. Choosing between them depends on whether execution certainty or price precision matters more for the strategy. For this reason, disciplined traders often use limit orders for entries and market orders only when speed is essential. Manage Position Size to Reduce Slippage Larger orders are harder to fill cleanly, especially in thin markets. Big positions may be filled across multiple price levels, increasing slippage. Reducing position size improves execution and keeps price impact to a minimum. This is particularly important for retail traders operating outside peak liquidity hours. Consider Guaranteed Stop-Loss Orders Guaranteed stop-loss orders ensure that a stop is filled at the exact price specified. These are most useful during extreme volatility or when holding trades over high-risk periods. The trade-off is cost, guaranteed stops usually come with wider spreads or additional fees. However, for traders who value certainty over cost, they can be a valuable risk-management tool. Avoid Holding Trades Over the Weekend Weekend gaps are a major source of unexpected slippage. News events can occur while markets are closed, causing price to reopen far from Friday’s close. Closing trades before the weekend removes this risk entirely. This is why many experienced traders prefer to start each week flat and risk-free. How to Trade During Slippage Sometimes slippage is unavoidable. When that happens, the goal shifts from avoiding it to trading around it intelligently. Place Limit Orders Instead Limit orders prevent slippage by refusing to fill at worse prices. While this may mean missing some trades, it protects execution quality over the long term. Use Stop-Limit Orders Instead of Stop Orders Stop-limit orders add a price cap to stop execution. This prevents extreme slippage but introduces the risk of not being filled during fast markets. They are best used in moderately volatile conditions rather than extreme news events. Trade Only Major Currency Pairs Major pairs typically have tighter spreads, deeper liquidity, and better execution. Exotic and minor pairs are far more prone to slippage, especially during off-hours. Scale Into Positions Scaling into trades reduces execution pressure. Instead of entering a full position at once, traders build positions gradually across multiple price levels. This approach reduces slippage and smooths out average entry price, particularly in volatile markets. Read more：15 Best Trading Strategies Recommended by Top Traders FAQ What is slippage in forex? Slippage in forex is the difference between the expected price of a trade and the price at which it is actually executed. It can be positive or negative and usually occurs during volatile or low-liquidity market conditions. Is slippage good or bad? Slippage can be both good and bad. Positive slippage means a trade is executed at a better price than expected, while negative slippage results in a worse execution price and higher trading costs. How much slippage is normal in trading? Normal slippage depends on the market, liquidity, and volatility. In highly liquid forex pairs during active sessions, slippage is often minimal, but it can increase significantly during news releases, gaps, or thin markets. Conclusion: Understanding Slippage as a Trader Slippage is not a flaw in trading; it’s a reality of live markets. Prices move, liquidity changes, and orders are matched in real time, not at guaranteed levels. Once traders accept this, slippage becomes something to manage rather than fear. The key reason slippage causes problems is not because it exists, but because it’s often ignored when trades are planned. By choosing the right order types, trading during liquid sessions, managing position size, and avoiding high-risk periods, traders can dramatically reduce its impact. In simple terms, slippage rewards preparation and punishes complacency. Understand it, plan for it, and it stops being a nasty surprise and becomes just another part of professional trading. Try These Next What is margin trading and how it works in forex？ What is leverage and how it works in forex trading？ What Is the Spread in forex? Learn to Calculate and Trade It

  ●  Platinum approaches $2,000   ●  US inflation softens   ●  Rate hike for the Japanese yen Platinum eyes $2,000 The rally in platinum continued yesterday, pushing the metal to within touching distance of $2,000 per ounce and matching its 2008 price tag. Platinum has now doubled since the start of the year, an accolade also achieved by silver earlier in the month, but the precious metal may not be the last. The club has a couple of weeks left to welcome a third member into its ranks, this time in the form of palladium, which surpassed $1,750 yesterday and is up 90% so far this year. Gold came close to another record high on Thursday, but ultimately fell short, settling to a minor loss at $4,332 per ounce by the daily close. US inflation softens Markets received a surprising update yesterday when the Bureau of Labor Statistics revealed a significant slowdown in US inflation. Year-over-year inflation was expected to hit 3.1% in November, but the official figure came in at just 2.7%. Core inflation, which excludes the more volatile components such as energy and food, lowered to 2.6%, falling far short of expectations of 3.0%. The unexpected figures buoyed US stock markets, lifting the Dow, S&P 500 and Nasdaq to positive daily closes. It is still too early to be thinking about the next move by the Federal Reserve, but should inflation continue to show signs of abating, it will open the door for future rate cuts on the dollar, which are currently not expected until March at the earliest. Rate hike for the Japanese yen The Bank of Japan raised the interest rate on the yen to a 30-year high of 0.75% this morning. The move was widely expected and provoked little to no reaction in currencies or in financial markets in general. The central bank is expected to continue raising rates into next year, a shift that will eventually impact the relative value of the yen, which now sits at decade-lows against most major currencies. Low rates have made the Japanese yen very attractive as a source of cheap financing in recent years, but such a model could quickly disappear if the BoJ keeps closing the gap between the yen and the dollar. #Platinum #Inflation #JPY

  ●  Crude slides on oversupply fears   ●  Silver touches $66   ●  Platinum challenges $1,900 Precious metals shine Silver is rallying once again this morning, touching $66 per ounce early in the Asian session. The white metal is not alone. Platinum has pushed aggressively higher over the past four sessions and judging by this morning’s performance, today will likely be the fifth. Platinum is currently challenging $1,900 at the time of writing and if it rises much higher will match prices not seen since 2008. The metal still has a long way to go before notching a new record high, which stands near $2,300 per ounce, but given the surge in silver so far this year, traders will understandably be entertaining such a possibility. Palladium is also looking at its fifth consecutive day in the green, and is now reaching over $1,650 per ounce. Despite a minor loss yesterday, gold still managed to close above $4,300 per ounce, and remains comfortable above that threshold as of this morning, but attentions are focused elsewhere for the time being. Crude oil sinks lower Crude oil prices fell to fresh multi-year lows on Tuesday. Futures for the Brent Crude benchmark were briefly pushed below $59 per barrel yesterday, while West Texas Intermediate futures were trading under $55 at one point. Such prices have not been seen since 2021 and reflect a global supply glut that has been building for much of the year. Since April, OPEC+ has continued to ramp up production, rapidly unwinding years of output cuts that had previously buoyed crude oil prices. The simple fact of the matter is that supply is outpacing consumption and this dynamic is unlikely to change in the near future. No one wants to reduce production, because no one wants to cede market share to their competitors. As peace talks between Russia and Ukraine continue to see progress, the probability of Russian oil re-entering the market increases – something that OPEC is painfully aware of. Should the sanctions against Russia be lifted in earnest, the additional player in worldwide oil markets could force prices down even further as different parties attempt to wrestle market share from one another. #Oil #Silver #Platinum

A stock split is exactly what it sounds like. A company splits its stock by increasing the number of outstanding shares, while decreasing the price of each one. A share may be divided into two, three, ten or more, with the cost of acquiring one share adjusting accordingly. The total market capitalisation of the company remains unchanged. Companies tend to perform stock splits when their share prices are high. Nvidia (NVDA) completed a 10-to-1 split in June 2024, at which time the company was trading at $1,200 per share. Following the split, each share was divided into ten shares, each worth $120. Nothing fundamental about the stock changed, merely a change of numbers. Companies can go through multiple rounds of stock splits. In fact, since going public in 1999, Nvidia has completed six separate stock splits, dividing one share at launch into a total of 480 shares today. The chipmaker is by no means an outlier; Home Depot and McDonald’s have undergone 13 and 12 stock splits respectively in their time. Stock splits have been around for a long time. The first examples, according to modern definitions of such, date back to 1916. American Can and American Tobacco both performed a stock split that year, following the same reasoning still used to this day: to make their shares more accessible to the average investor. Over a century later, the trend is still going strong, and by and large follows the same logic. Why do companies perform stock splits? The argument is that acquiring a share is more difficult for an average investor if the price tag is too high. Many stocks had a large barrier to entry because of this, which excluded a number of buyers. Even among those who could afford to buy higher-priced stocks, the perception that the company represents some kind of luxury good can deter some investors. By bringing their price down to more reasonable levels, the shares become more available, thereby expanding the potential pool of buyers. Moreover, a greater number of lower-priced shares results in greater liquidity, which may narrow the bid-ask spread, making life easier for buyers and sellers alike. Things changed considerably in late 2019, when Robinhood introduced fractional trading to its customers, allowing people to buy fractions of a share in a given company. Other competing platforms quickly implemented similar solutions, and over the past five years fractional trading has become widely available. As a result, the process of splitting a stock now makes a lot less sense than it once did. This begs the question of why Nvidia bothered to do one last year. If investors are free to buy only a fraction of a share, what is the point of a stock split? The answer is in fact mostly psychological. On a basic level, if a company is undergoing a stock split, or even thinking about one, it is because their share price has appreciated significantly in recent times, which is an obvious selling point for the stock itself, one that may potentially attract new investors. Such a factor certainly plays a role, but there is also a much deeper element at play: the notion of perceived affordability. Reverse stock splits As an aside, stock splits can also go the other way, consolidating a large number of shares into fewer, reducing the amount of shares outstanding. Such events are known as reverse stock splits, and typically occur when a company is in trouble. While a regular stock split is good publicity, a reverse stock split is generally a red flag. If a stock continuously underperforms, its share price may fall below the minimum price requirement of the exchange, meaning the stock will get delisted if stays too low for too long. For example, the New York Stock Exchange maintains a strict $1 price threshold, below which the associated company will eventually receive a deficiency notice. One of the most famous examples of a reverse stock split is the shipping company DryShips Inc (DRYS), which completed no fewer than eight such operations between 2016 and 2017. The company performed split after split in an attempt to counter the stock’s shockingly bad performance, desperately trying to remain listed on the stock exchange. The successive consolidations made for a combined reverse stock split of 1-to-11,760,000 shares. At one point, the company was facing ten separate class-action investor lawsuits, with accusations ranging from stock manipulation to violating American securities laws. Investment psychology For reasons that have nothing to do with logic, investors are more comfortable investing in assets when they lie within a specific price range. A high price tag can scare people away because they think that it is a sign that something is overvalued. The assumption is that an asset worth $1,000 must be overvalued compared to one that is only worth $3, and therefore the latter is a better investment. Such an argument is obviously nonsensical because it ignores the market cap of the company. Sticking with chip manufacturers, let us compare Nvidia (NVDA) and Advanced Micro Devices (AMD). Nvidia has a share price of $177; AMD has a share price of $217. Is AMD “worth” more than Nvidia? Of course not, because Nvidia has over 24 billion shares outstanding, granting the company a market cap of $4 trillion, whereas AMD has just 1.6 billion shares outstanding, granting the company a market cap of $350 billion. Most people in investment circles are obviously aware of how market cap works and why investing in assets based on price alone is silly. But a small part of our brain sees the high price tag and gets skittish. Multiply that niggling feeling by the millions of people who subconsciously experience it, and suddenly there is a very real, tangible effect. The same phenomenon is arguably more pronounced in cryptocurrencies, which, to put it mildly, has its fair share of inexperienced market participants. People flock to “lower priced” coins for no other reason than the price tag, blissfully unaware of the concept of market capitalisation. To each their own. The point is, companies are wise to this effect. Companies will initiate stock splits in order to bring their share price right down to the sweet spot, whether they publicly admit it or not. Many cryptocurrencies are guilty of the same. There are costs associated with performing a stock split, including legal fees and administrative work, so the fact that companies will pursue such ventures, despite the cost of doing so, points to the lucrative nature of these operations. A stock split attracts a lot of attention. A share price going up so much that the company has to undergo a split? What is not to like? The hype surrounding such an event does indeed typically result in a surge of interest, and a rise in price. Such effects are meticulously monitored and studied, with many believing the $30 to $300 range being ideal in terms of optics for potential buyers. $1,000 price tags put people off just as much as sub-$1 prices. Interestingly, the acceptable range appears to vary by region, with different parts of the world preferring different price bands. If investors acted purely on logic, the price of a stock or crypto would not matter at all – market cap would be all that mattered. Unfortunately, we are not as clever as we think. Perception matters more than we would like to admit. With that said, some stocks are completely immune to such notions, such as Berkshire Hathaway, whose class A shares have never undergone a single stock split since their initial listing in 1988. BRK.A hit a share price of over $800,000 earlier in the year. That is not a decimal point. Eight hundred thousand dollars per share. The argument that markets are irrational is one that needs little justification; it is obvious for all to see. Stock markets, and financial markets in general, are a collection of human emotions. As the saying goes: “Markets can remain irrational longer than you can remain solvent.” The quote is attributed to John Maynard Keynes, renowned economist, who despite his expertise, lost significant amounts of money in the 1920s. Keynes would eventually learn his lesson, pivoting his bets towards much longer time frame plays. He would go on to run the endowment for King’s College, Cambridge, consistently beating the market, year after year, for over two decades. Reality usually catches up; it just takes a while.

  ●  Double NFP drop on Tuesday   ●  Probable rate hike on the Yen   ●  Markets shy away from AI Investors flee from AI US stocks took a turn for the worse last Friday, as an increasing number of investors shied away from big tech companies. The tech-heavy Nasdaq Composite index shed 1.7%, while the S&P 500 lost 1.1% and the Dow Jones closed 0.5% in the red – the further removed from tech stocks, the lesser the damage. Many companies associated with the artificial intelligence space suffered on Friday, including Oracle (ORCL), which fell another 4.5% after incurring a double-digit loss the day prior. Fellow chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) lost 3.3% and 4.8% respectively, while Broadcom (AVGO) plummeted over 11% following its latest earnings report, which failed to meet investors’ sky-high expectations regarding the company’s sales outlook. Despite the heavy selloff, the poor performance in technology stocks appears somewhat contained, with broader markets remaining relatively unaffected. There is a growing sentiment that AI valuations are overblown, and this has manifested in a pivot towards other sectors, as evidenced by the fact that the Dow gained over 1% last week, while the S&P 500 and Nasdaq both closed in the red. Precious metals remain in bid Gold continued to push higher last Friday, reaching highs over $4,350 before settling a hair’s breadth below $4,300. The precious metal started the week strongly this morning, rising back towards $4,340 in the early Asian session. Silver traders finally took some profit last week, lowering the white metal to a $61.91 weekly close, but the bid has once again returned as of this morning. The spotlight may turn elsewhere this week, this time to platinum, which is currently challenging $1,800 – a price not seen since 2011. The week ahead Traders have a lot to keep an eye on this week. Tomorrow, the Bureau of Labor Statistics will publish a special NFP report, which will include nonfarm payroll figures for both October and November, granting the publication additional weight. However, the report will only feature unemployment stats for November, because the household survey data was not collected in October due to the government shutdown. Tuesday and Wednesday will then provide back-to-back retail sales for October and November, while Thursday will see the publication of the latest CPI figures. The backlog is rapidly being cleared. Moving away from the United States, this week will also see three major central bank decisions. On Thursday, the Bank of England is expected to enact a rate cut of its own, lowering the interest rate on the Pound to 3.75% from 4% currently. Later in the day, the European Central Bank will in all likelihood hold rates on the Euro steady at 2.15%. Finally, the most anticipated decision of the week lies with the Bank of Japan, which, in the early hours of Friday morning, will probably increase rates on the Yen to 0.75% from 0.5% at present. The shift to higher rates could be acutely far-reaching because low borrowing costs on the Japanese Yen have long been a source of cheap credit to markets around the world. The unwinding of such could have a detrimental impact on a number of markets, particularly those susceptible to low liquidity conditions, such as cryptocurrencies. To put the adjustment in context, rates on the Yen have not been as high as 0.75% since 1995. Despite the looming threat, the Yen does not appear to be making any strong moves, while Japanese bond yields have increased steadily for many months already, suggesting the rebalancing is somewhat priced in. Time will tell. #Gold #Silver #AVGO #NFP

In forex trading, the spread is one of the most important concepts a trader must understand, because it represents the basic cost of opening every position. The spread in trading refers to the difference between the bid price and the ask price of a currency pair, and this cost directly affects profitability across all trading strategies. In simple terms, the spread is how brokers structure pricing, how liquidity is reflected in the market, and how trading conditions shift throughout the day. Understanding the spread matters because it influences trade execution, affects short-term trading performance, and determines how much the market must move before a position turns profitable. The core principle is that tighter spreads generally reduce trading costs, while wider spreads increase them-especially during volatile or low-liquidity conditions. This article will explain the principles behind forex spreads, how they are calculated, why they fluctuate, and the factors that influence them. By the end, traders will understand how spreads work in practice and how to make better trading decisions as a result. What Is the Spread in Forex? The spread in forex is the difference between the bid price and the ask price of a currency pair. In forex trading, the term “spread” refers to the basic cost you pay to open a position, and it represents the gap between what buyers are willing to pay (bid) and what sellers are willing to accept (ask). The bid/ask spread is one of the most important pricing elements in the forex market because it determines how much the market must move before a trade becomes profitable. Pips are the standard unit used to measure spreads in forex. To put it simply, the spread expressed in pips is calculated as ask – bid, and this value determines the trading cost for entering or exiting a position. The key reason spreads fluctuate is that market liquidity and volatility constantly change, affecting how tightly prices can be quoted by brokers and liquidity providers. Key points: The spread measures the difference between bid and ask prices. A forex spread is measured in pips, the smallest unit of price movement. A narrow (tight) spread means lower trading costs, a wider spread means higher costs. Spreads vary due to liquidity, volatility, and market conditions. The bid/ask spread reflects real-time market activity and pricing efficiency. As a result, understanding the spread gives traders a clearer picture of transaction costs and how price movements affect trade outcomes. How to Calculate the Spread in Forex In forex trading, calculating the spread means finding the pip difference between the bid price and the ask price. The core principle is simple: the spread shows the trading cost, and it is obtained by subtracting the bid from the ask. In practice, traders use this calculation to understand whether a spread is low, medium, or high, which directly affects trade profitability. Formula:Spread = Ask Price – Bid Price Example:If EUR/USD is quoted at 1.0850 (bid) and 1.0852 (ask), then:1.0852 – 1.0850 = 0.0002 = 2 pipsThis means the spread on EUR/USD is 2 pips. In simple terms, pips are the unit used to measure the spread. A low spread often appears in highly liquid currency pairs, while a higher spread usually occurs in volatile or low-liquidity conditions. For example, major pairs like EUR/USD typically have lower spreads, while exotic pairs see much wider spreads. Spread Levels and Their Meaning Spread Level Pip Value Meaning Low Spread 1–2 pips Indicates high liquidity and lower trading costs. Medium Spread 3–5 pips Market is moderately liquid; trading costs are average. High Spread 6+ pips Conditions are volatile or liquidity is low, increasing trading costs. Typical Spread Ranges in Different Conditions Spread Level Typical Pip Range Market Conditions Common Currency Pairs Trading Impact Low Spread 1–2 pips High liquidity, stable sessions EUR/USD, GBP/USD, USD/JPY Lower costs, ideal for active traders Medium Spread 3–5 pips Moderate liquidity or mild volatility Minor pairs (e.g., EUR/GBP, AUD/JPY) Acceptable costs, manageable for most strategies High Spread 6+ pips Low liquidity or high volatility Exotic pairs (e.g., USD/TRY, USD/ZAR) Higher costs, harder for short-term strategies A clear understanding of spread calculation helps traders evaluate trade timing, cost efficiency, and overall market conditions. This is why accurate calculation is an essential part of forex trading. Understanding Forex Spread Quotes A forex spread quote shows the bid price and ask price of a currency pair, and the spread is the numerical difference between them, measured in pips. In forex trading, this structure matters because the bid–ask spread represents the actual cost a trader pays when opening or closing a position. Understanding how these prices appear in a quote helps traders interpret market conditions and evaluate execution quality. Most forex brokers present bid and ask prices in a dual-quote format or in a simple pricing table. Below is an example of a typical quote: Bid Ask 1.1200 1.1250 Sell Buy What the Bid and Ask Mean Bid Price: The price at which the broker is willing to buy from you (the price you sell at). Ask Price: The price at which the broker is willing to sell to you (the price you buy at). Examples of Real Spread Quotes EUR/USD = 1.1050 / 1.1052 → Spread = 2 pips USD/JPY = 150.321 / 150.329 → Spread = 0.8 pip Here’s how it works: When you buy, you pay the ask price. When you sell, you receive the bid price. The spread reflects the difference between these prices and forms the immediate trading cost. Spreads also change depending on market conditions. High liquidity sessions (London or London–New York overlap): spreads typically narrow. Low liquidity sessions (late Asian session) or during major news events: spreads often widen. As a result, understanding spread quotes helps traders assess market quality, choose the right trading times, and manage transaction costs more effectively. What Types of Spreads Exist? In forex trading, the type of spread you see on a trading platform depends on how the broker generates revenue and how prices are sourced. In simple terms, spreads can be fixed, variable, ultra-low variable, or raw, and each type reflects a different pricing model and trading environment. Understanding these spread types helps traders choose the account structure that best fits their strategy. Most brokers operate under three main models-Market Maker, STP, and ECN-and each model offers different spread conditions. Market Makers typically provide fixed spreads, while STP and ECN brokers offer floating or raw spreads that adjust with real-time market liquidity and volatility. Broker Model Comparison Table Broker Model Spread Type Provided Feature Market Maker Fixed Spread Predictable, controlled pricing set internally. STP Floating Spread Prices come directly from liquidity providers; spreads fluctuate. ECN Raw / Ultra-Low Variable Spread Tightest spreads from LPs, commission charged separately. Four Main Types of Forex Spreads Fixed Spreads Fixed spreads are spreads that remain constant under most market conditions. The broker keeps the bid–ask difference unchanged, allowing traders to know their costs in advance. Variable Spreads Variable (floating) spreads change continuously based on liquidity and volatility. They may be very tight during active sessions but widen during news events or quiet periods. Ultra–Low Variable Spreads Ultra-low spreads are a type of floating spread found mainly in ECN accounts, where quotes from multiple liquidity providers compress spreads to near-zero levels. A commission fee is charged instead. Raw Spreads Raw spreads are sourced directly from liquidity providers without broker markup. These spreads can be as low as 0.0 pip, with commissions applied separately. Each spread type works differently in practice, and understanding these differences helps traders choose the most suitable account for their trading style. What Are Fixed Spreads in Forex? Fixed spreads in forex are spreads that remain constant under most market conditions, meaning the bid–ask difference does not change even when market volatility increases. In simple terms, fixed spreads offer stable pricing because the broker sets the spread internally rather than sourcing it directly from external liquidity providers. Having stability allows traders to know their transaction costs in advance, which is why fixed spreads are often preferred by beginners. Fixed spreads are typically offered by Market Maker brokers. Because they control their own pricing, they can keep spreads stable during normal conditions. However, during extreme volatility-such as FOMC meetings, CPI reports, or Non-Farm Payroll releases-fixed-spread brokers may temporarily widen their spreads or pause quoting to manage risk. Advantages of Fixed Spreads 1.Predictability：Fixed spreads make trading costs predictable because the bid–ask difference does not fluctuate with market conditions. This is helpful for planning risk and calculating trade costs accurately. 2.Ideal for Beginners：New traders often prefer fixed spreads because they create a more stable learning environment, with fewer surprises during execution. 3.Consistent Cost Management：Since spreads remain stable, traders can better manage their overall cost structure and estimate break-even levels with more confidence. Disadvantages of Fixed Spreads 1.Higher Overall Cost:Fixed spreads are usually wider than low-floating spreads offered by STP or ECN brokers, which can increase long-term transaction costs. 2.Less Reflection of Market Reality:Because prices are set internally by the broker, fixed spreads may not reflect real-time interbank liquidity conditions. 3.Limited Broker Options:Fewer brokers offer fixed spreads today, as most platforms have transitioned to variable pricing models. Fixed spreads can be a practical option for traders who value cost stability, but they may not be optimal for strategies requiring the tightest spreads. What Are Variable Spreads in Forex? Variable spreads in forex are spreads that change continuously based on market conditions. In simple terms, a floating spread widens or narrows depending on liquidity and volatility, meaning the bid–ask difference is never fixed. This type of spread reflects real-time market pricing and can fluctuate significantly during different trading sessions or major economic events. Floating spreads are primarily offered by STP and ECN brokers because their prices come directly from liquidity providers. During high-liquidity periods-for example, EUR/USD in the London session-the spread may fall to 0.1–0.5 pips. However, during major news releases or periods of market stress, the spread can widen sharply to 5–10 pips or more. Floating spreads are influenced by: Market liquidity: Higher liquidity → tighter spreads Volatility: High volatility → wider spreads Trading sessions: London/New York sessions typically offer the lowest spreads While floating spreads may reduce costs when liquidity is strong, they are not always cheaper. During low-liquidity hours or volatile conditions, they can widen dramatically, making trading more expensive and less predictable. Advantages of Variable Spreads 1.Market-Reflective Pricing：Variable spreads better reflect real market conditions because they change based on liquidity and volatility. 2.More Competitive Pricing：During active sessions, floating spreads can be extremely tight, reducing overall trading costs. 3.Closer to Interbank Rates：ECN/STP pricing often mirrors the raw prices seen in institutional trading environments Disadvantages of Variable Spreads 1.Unpredictable Costs：Because spreads fluctuate, traders may face higher-than-expected costs during volatile periods. 2.Increased Trading Complexity：Short-term strategies must account for sudden spread widening, especially around news releases. 3.Risk During High Volatility：Spreads can widen rapidly during economic announcements, affecting stop-loss placement and execution.Variable spreads are ideal for traders who want access to more realistic market pricing but are comfortable managing fluctuating costs. What Are Ultra–Low Variable Spreads? Ultra–low variable spreads are a specific type of floating spread characterized by extremely tight pricing-often between 0.0 and 0.3 pips during high-liquidity periods. In forex trading, the term “ultra–low variable spreads” refers to spreads delivered directly from multiple liquidity providers without any broker markup added. These spreads are typically available on ECN accounts, where brokers charge a separate commission instead of widening the spread. The key reason ultra–low spreads can exist is the deep liquidity aggregated from banks, prime brokers, and institutional liquidity pools. Because multiple liquidity providers compete to offer the best bid and ask prices, the bid–ask difference can shrink to near-zero in highly active sessions. However, spreads still fluctuate; they may widen to 5–10 pips during volatile conditions or major economic announcements. Ultra–low variable spreads are especially suitable for: Scalpers Algorithmic / EA traders High-frequency traders Day traders News traders who require fast execution and minimal spread costs This type of spread provides traders with access to the most competitive pricing available in retail forex trading. Advantages of Ultra–Low Variable spreads 1.Lowest Trading Costs:Because spreads can reach 0.0 pips, overall transaction costs are significantly reduced, especially for high-volume traders. 2.No Markup From the Broker:The broker does not add any additional spread; instead, a transparent commission fee is charged. 3.Perfect for Precision-Based Strategies:Scalping, EA systems, and algorithmic strategies benefit from ultra-tight spreads and faster execution. 4.Closer to True Market Depth:Pricing reflects genuine interbank liquidity with fewer requotes and more stable fills. Disadvantages of Ultra–Low Variable Spreads 1.Commission Fees Apply:Because spreads are not marked up, brokers charge per-lot commissions, increasing the cost per trade for low-frequency traders. 2.Spreads Still Widen During Volatility:Even ultra–low pricing cannot prevent spread spikes during major news events or low-liquidity periods. 3.Beginners May Misinterpret “0.0 Pips”:Zero spreads do not mean “free trading”; costs still exist due to commissions and variable execution. 4.Higher Minimum Deposit Requirements:ECN accounts often require larger starting balances and more stringent trading conditions.Ultra–low variable spreads offer unmatched cost efficiency but require traders to understand commission-based pricing and volatility-related spread changes. What Are Raw Spreads? Raw spreads in forex are the pure, unmarked bid and ask prices streamed directly from liquidity providers. In simple terms, “raw spreads” refer to pricing without any broker markup added, meaning the spread can be as low as 0.0 pip during periods of high liquidity. This type of pricing is commonly offered on ECN or high-tier STP accounts where the broker earns revenue through a separate commission rather than widening the spread. Raw pricing comes from multiple liquidity sources, such as banks, ECN prime brokers, and institutional liquidity pools. Because these providers compete to quote the best bid and ask prices, traders often receive extremely tight spreads that closely reflect real market depth. However, the spread still fluctuates with liquidity conditions and may widen during news events or thin trading hours. Raw spreads are typically preferred by: Scalpers High-frequency traders Algorithmic / EA traders Active day traders High-volume traders This structure offers transparency and cost efficiency for traders who rely on tight execution and precise pricing. Advantages of Raw Spreads 1.Ultra-Tight Spreads:Raw spreads can reach 0.0 pips, significantly reducing trading costs for active traders. 2.Tranclass="list"sparent Pricing:The broker does not alter the spread; all markups are removed for maximum price clarity. 3.Lower Overall Cost for Active Traders:Even after commissions, raw pricing is often cheaper than standard spread-only accounts. 4.Ideal for High-Frequency and Algorithmic Strategies:EA systems, scalping setups, and low-latency strategies perform better with minimal spreads. 5.Better for News Trading:During news spikes, raw pricing may still offer tighter spreads compared to traditional models. Disadvantages of Raw Spreads 1.Commission Fees Are Mandatory:ECN accounts charge a per-lot commission, increasing the cost per trade for low-volume traders. 2.More Spread Volatility:Because pricing comes directly from liquidity providers, spreads may fluctuate more aggressively during thin liquidity. 3.Higher Minimum Capital Requirements:Raw spread accounts often require larger deposits and are tailored to more experienced traders. 4.Not Ideal for Beginners:Understanding cost structures and volatile spread behaviour can be challenging for new traders. 5.Execution Quality Depends on LP Network:The performance of raw spreads relies heavily on the broker’s liquidity provider mix and routing technology.Raw spreads provide the most transparent and competitive pricing in the market, but they suit traders who understand commissions, volatility, and advanced execution conditions. Forex Spread Types Compared The forex market offers several types of spreads, and each works differently depending on broker model, liquidity conditions, and trading strategy. In simple terms, spreads can be fixed, variable, ultra–low variable, or raw, and understanding these differences helps traders choose the most cost-efficient account type for their trading style. The comparison below summarises how each spread type functions, its advantages, disadvantages, and who it is best suited for. Comparison Table: Types of Forex Spreads Spread Type Definition Typical Spread Range Advantages Disadvantages Best For Fixed Spreads A spread that remains constant regardless of market volatility. Broker sets a fixed bid–ask difference. Usually 1.5–3.0 pips on major pairs Predictable costs; stable pricing; ideal for beginners Higher cost than raw/ECN; may widen during extreme volatility; not market-reflective Beginners; low-frequency traders; those needing stable pricing Variable Spreads A floating spread that changes with liquidity and volatility. Tight in liquid markets (0.1–1.0 pips), wider in volatility (5+ pips) Reflect real market conditions; competitive pricing during active sessions Costs unpredictable; may widen sharply during news; more complex to manage Day traders; swing traders; traders active during liquid sessions Ultra–Low Variable Spreads A form of floating spread with near-zero pricing sourced from multiple LPs; commission charged separately. 0.0–0.3 pips in liquid periods; 5–10 pips in volatility Lowest trading costs; no broker markup; ideal for precision strategies Commission fees; spreads still widen; higher deposits required Scalpers; EA/algorithmic traders; high-frequency traders Raw Spreads True interbank prices with zero markup from the broker; commission charged. 0.0–0.2 pips under normal liquidity Transparent pricing; lowest overall cost for active traders; ideal for advanced strategies Commission mandatory; volatile spreads; requires experience High-volume traders; news traders; ECN users; algorithmic systems This comparison helps traders quickly identify which spread model aligns with their strategy and risk tolerance. As a result, choosing the right spread type can significantly improve execution, lower costs, and enhance long-term trading performance. Why Does the Spread Change in Forex? In forex trading, the spread changes because the bid and ask prices constantly move with market conditions. The key reason is that liquidity and volatility are never static, so the difference between the bid and ask widens or narrows based on how actively the market is trading. When liquidity is high, spreads tend to tighten. When volatility increases or liquidity drops, spreads typically widen. Several major factors influence spread changes, including trading sessions, volatility, overall market liquidity, news events, currency pair type, and broker model. Understanding these factors helps traders anticipate when spreads are likely to rise or fall, improving trade timing and cost management. Trading Sessions Different forex sessions create different liquidity conditions, which directly affect spreads. The core principle is higher liquidity → tighter spreads, while lower liquidity → wider spreads. Trading Session Spread Characteristics Trading Session Liquidity Level Spread Behaviour Asian Session Low–Medium Spreads tend to be wider due to slower market activity. European Session (London) High Spreads usually tighten as liquidity increases. U.S. Session (New York) High Tight spreads, especially during active market hours. London–New York Overlap Very High Tightest spreads of the day; highest trading volume. Session Opens Volatile Spreads may widen temporarily due to sudden price adjustments. Session Closes Lower liquidity Spreads widen as trading volume drops. After-hours / Late-night periods Very Low Spreads often widen significantly. The session you trade in can impact your trading costs, which is why many traders prefer the London or London–New York overlap. Read more：Best time to trade forex: When to enter the market during the day Market Volatility Higher market volatility usually causes spreads to widen. When prices move rapidly, liquidity providers adjust their quotes to manage risk, leading to unstable or temporarily expanded spreads.Examples include: CPI or NFP releases Major geopolitical news Sudden market shocks As a result, volatility increases trading costs and makes short-term strategies harder to execute. Market Liquidity Market liquidity refers to how easily trades can be executed without affecting price. High liquidity: Many buyers and sellers → tighter spreads Low liquidity: Fewer participants → wider spreads Liquidity comes from major institutions, liquidity providers (LPs), and overall market participation. When liquidity thins, spreads widen to reflect increased risk. News Events Major news releases often cause spreads to widen sharply. High-impact events create uncertainty, causing liquidity providers to reduce exposure, resulting in wider bid–ask differences. Common widening events: NFP(Non-Farm Payrolls) CPI (inflation data) GDP releases FOMC meetings Unexpected geopolitical announcements During these events, spreads may widen by several pips-even on major pairs. Read more:FOREX NEWS Currency Pair Type Different currency pairs naturally have different spread ranges. Major pairs (EUR/USD, GBP/USD, USD/JPY): High liquidity → low spreads Minor pairs (EUR/GBP, AUD/NZD): Moderate liquidity → medium spreads Exotic pairs (USD/TRY, USD/ZAR): Low liquidity → high spreads The lower the trading volume, the wider the typical spread will be. Broker Type Broker models also influence how spreads behave. Market Makers: Can keep spreads fixed or slightly adjusted STP Brokers: Spreads fluctuate based on liquidity provider pricing ECN Brokers: Very tight spreads but highly sensitive to liquidity changes Brokers may widen spreads during extreme volatility to protect against slippage and execution risks. Forex Spread Trading Strategies Forex spread trading strategies focus on using spread behaviour-tightening or widening-to reduce trading costs or improve trade timing. In simple terms, these strategies help traders choose when to trade, which pairs to trade, and how to adapt their approach based on spread conditions. Understanding these methods can improve profitability and reduce unnecessary trading costs. Below are the four key spread-based trading strategies. Low Spread Currency Pairs Strategy The low spread currency pairs strategy focuses on trading major pairs that naturally have tight spreads, such as EUR/USD, GBP/USD, and USD/JPY. The core principle is that lower spreads reduce overall trading costs, making this approach ideal for active traders who enter the market frequently. This strategy works because major pairs have strong liquidity, especially during the London and New York sessions. However, traders should be aware that spreads may still widen during news events or low-liquidity periods. Best suited for: Day traders Scalpers Traders who trade during major sessions Key benefits: Lower transaction costs Faster break-even points High liquidity and smoother execution Time-Based Spread Trading Time-based spread trading focuses on entering trades during periods when spreads are naturally at their lowest-typically during the London session or the London–New York overlap. In simple terms, the strategy is built around trading when the market is most liquid. This strategy works because spreads tighten when institutional participants are most active. However, spreads may widen briefly at session opens due to sudden price adjustments. Best suited for: Intraday traders High-frequency traders Traders who want predictable cost conditions Key benefits: Consistently tighter spreads Reduced slippage Improved execution quality Scalping with Tight Spreads Scalping with tight spreads is a strategy where traders make many small trades aiming for small price movements. Because scalpers open dozens or sometimes hundreds of trades in a session, spread size becomes one of the most important factors. This strategy works best with ECN accounts, where spreads can be near zero, but a commission applies. Traders must also consider spread widening during news releases, as scalping requires extremely stable and low-cost conditions. Best suited for: Scalpers Algorithmic traders High-frequency traders Key benefits: Maximum cost efficiency Ultra-tight spreads increase profitability potential Ideal for automated strategies News Avoidance Strategy The news avoidance strategy focuses on avoiding trades shortly before and after high-impact economic events. In simple terms, traders stay out of the market when spreads are likely to widen dramatically. This strategy works because spreads often spike during releases such as NFP, CPI, FOMC, and major geopolitical headlines. Avoiding these moments protects traders from unexpected costs and slippage. Best suited for: Swing traders Beginners Traders who prefer stable trading conditions Key benefits: Reduced volatility risk Better control over execution Avoidance of sudden spread spikes Read more：15 Best Trading Strategies Recommended by Top Traders FAQ What is a good spread in forex? A good spread in forex is typically 1–2 pips for major currency pairs during high-liquidity sessions. Lower spreads indicate better trading conditions, while wider spreads suggest higher volatility or reduced liquidity. Is a higher or lower spread better? A lower spread is better because it reduces trading costs and requires a smaller price movement to reach break-even. A higher spread increases costs and usually signals low liquidity or high volatility. How much is 1 spread in forex? A spread is measured in pips, with most major pairs using 0.0001 as one pip. For example, a 2-pip spread on EUR/USD might appear as 1.1051 / 1.1053. What affects forex spreads? Forex spreads are affected by liquidity, volatility, trading sessions, broker model, and economic or geopolitical events. High-impact news and low-liquidity periods usually cause spreads to widen. What is the bid-ask spread? The bid-ask spread is the difference between the bid price (selling price) and the ask price (buying price) of a currency pair. It represents the immediate cost traders pay when opening a position. How do spreads affect forex profits? Spreads directly reduce potential profits because they act as an initial cost. A trade must move beyond the spread in your favour before becoming profitable. Wider spreads require larger market moves, increasing difficulty for short-term strategies. Final Thoughts In simple terms understanding the spread in forex is essential for every trader because it represents the fundamental cost of entering the market. The spread reflects the difference between the bid and ask prices, showing how liquidity, volatility, and market conditions shape trading costs in real time. To put it simply: tight spreads reduce costs and improve efficiency, while wider spreads increase the amount the market must move before a trade becomes profitable. Throughout this guide, I have covered how spreads are calculated, how spread quotes work, why spreads change, and the different types of spreads offered by brokers. Together, we have also explored practical trading strategies built around spread behaviour, helping traders minimise unnecessary costs and choose optimal trading times. By understanding how spreads work in practice, traders can make better decisions, improve trade timing, and enhance overall profitability. The spread is not just a small number on a price chart-it’s a key component that shapes your trading edge. Try These Next What is margin trading and how it works in forex？ What is leverage and how it works in forex trading？