Spread

Spread - The difference between the ask price and bid price of a currency pair. It represents the broker’s markup and the effective cost of trading. For example, if EUR/USD is quoted 1.1002/1.1000, the spread is 0.0002 (2 pips). As BabyPips notes, “the bid/ask spread is the difference between the bid and ask price”. In practice, a trader pays the spread on opening and closing a position (buy at higher ask, sell at lower bid).