Trading Mechanics

Module 7 — Spread

Every pair has two prices: the bid (where you can sell) and the ask (where you can buy). The difference is the spread, and it is the cost of entering a trade. A one-pip spread on EURUSD means a new position starts one pip behind.

Spreads widen when liquidity thins — the daily rollover, weekend gaps, and the seconds around high-impact news. Trading through those windows means paying more for the same trade, and sometimes far more.

Key concepts

Bid is the sell price
Ask is the buy price
Spread is an entry cost

Practical example

If bid is 1.0849 and ask is 1.0851, the spread is two pips.

Common mistake

Ignoring spread during thin liquidity or major news.

Knowledge check

Check your understanding

1. Which statement best captures spread?

Include transaction cost before deciding whether a trade is worthwhile.Ignoring spread during thin liquidity or major news.The outcome is guaranteed when the pattern appears.Context and risk can be ignored.

2. Which action best reflects the disciplined approach from this lesson?

Include transaction cost before deciding whether a trade is worthwhile.Ignoring spread during thin liquidity or major news.Act first and review the context afterwards.Increase exposure when uncertain.

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