The spread is the difference between the bid price (what buyers will pay) and the ask price (what sellers will accept) for an instrument. It represents a direct cost of trading — the narrower the spread, the less you pay. Spreads can be fixed or variable. Variable spreads fluctuate with market conditions and are typical of STP/ECN execution.
EUR/USD is quoted at 1.1050 (bid) / 1.1052 (ask). The spread is 2 pips, or 0.2 pips on a raw ECN account. When you open a buy trade, you enter at the ask (1.1052) and need the price to rise at least 2 pips to break even.
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