Forex What Is Spread. It is important for traders to know what factors influence the variation in spreads. The spread is how "no commission" brokers make their money.
Forex spread is the difference between the ask price and the bid price of a Forex pair. This increases the impact on the income of the seller or buyer. In Forex, a pip is the fourth digit after the decimal point in the exchange rate.
Usually, the Forex spread is how the broker companies make money.
Essentially, forex spread is how brokers (especially those who take no commission) make their money.
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For a simple analogy, consider that when you purchase a brand-new car, you pay the market price for it. Hint: You can think of it as a 'tax' the forex brokers place on their product (the currency pairs). Spread is the difference between the price of buying a currency and the price of its sale.