When trading forex, you will notice that the buy and sell price of a currency pair is different. This difference is known as the spread and is the cost of trading forex. Understanding the forex spread is essential for successful trading as it can affect your profits and losses. In this article, we will discuss how to see the forex spread.
What is the forex spread?
The forex spread is the difference between the bid and ask price of a currency pair. The bid price is the price at which you can sell a currency pair, and the ask price is the price at which you can buy a currency pair. The spread is the cost of trading and is usually expressed in pips.
For example, if the bid price of the EUR/USD is 1.2000, and the ask price is 1.2005, the spread is 5 pips. This means that if you buy the EUR/USD, you will pay 1.2005 for every euro you buy, and if you sell the EUR/USD, you will receive 1.2000 for every euro you sell.
How to see the forex spread?
The forex spread can be seen on the trading platform. Most trading platforms display the bid and ask price, and the spread is calculated automatically. Here are the steps to see the forex spread on the MetaTrader 4 platform:
Step 1: Open the MetaTrader 4 platform and log in to your account.
Step 2: Choose the currency pair you want to trade by clicking on the ‘Market Watch’ window.
Step 3: Right-click on the currency pair and select ‘Properties’ from the dropdown menu.
Step 4: A new window will appear displaying the ‘Symbol Properties.’ In this window, you can see the bid and ask price, and the spread.
Step 5: To make the spread visible on the chart, click on the ‘Charts’ tab and select ‘Properties’ from the dropdown menu.
Step 6: In the ‘Properties’ window, select the ‘Common’ tab and check the ‘Show Ask Line’ box. This will display the ask price on the chart, and you can see the spread by the distance between the bid and ask price.
Another way to see the forex spread is by using the market watch window. Here are the steps to see the forex spread using the market watch window:
Step 1: Open the MetaTrader 4 platform and log in to your account.
Step 2: Click on the ‘Market Watch’ window.
Step 3: Choose the currency pair you want to trade.
Step 4: The bid and ask price will be displayed in the ‘Market Watch’ window, and the spread is calculated automatically.
Why is the forex spread important?
The forex spread is important because it affects your profits and losses. When you trade forex, you need to pay the spread, which is the cost of trading. The higher the spread, the more it will cost you to trade. This means that if you want to make a profit, you need to make more than the spread.
For example, if the spread of the EUR/USD is 2 pips, you need to make more than 2 pips to make a profit. If you make less than 2 pips, you will make a loss. Therefore, it is essential to understand the spread and factor it into your trading strategy.
Conclusion
Understanding the forex spread is crucial for successful trading. The spread is the cost of trading forex and is the difference between the bid and ask price. The spread can be seen on the trading platform and is calculated automatically. By understanding the spread, you can factor it into your trading strategy and make informed decisions.
