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 The spread is the difference between the buy (ask) and the sell (bid) price of an instrument.

The spread is one of the chief costs of a trade

The tighter (smaller) the spread, the lower the cost of the trade

We offer both ‘fixed’ spreads and ‘floating’ spreads, so you can decide which account best suits your trading style and strategy

The spread on financial markets is the difference between the buy (ask) price of an instrument and the sell (bid) price of an instrument. When placing a trade on the market, the spread is also the main cost of the position. The tighter the spread, the lower the cost of trading. The wider the spread, the higher it costs. You can also view the spread as the minimum distance the market has to move in your favour before you could start earning a profit.

For example, let’s say our EURUSD market is quoted with a buy price of 1.0984 and a sell price of 1.0983, so the spread is calculated by subtracting 1.0983 from 1.0984 — giving a total spread of 0.0001 or 1 pip. Once you’ve placed a trade on the EURUSD market and the market moves at least 1 pip in your favour, that’s when your position can begin generating profits. This is also the reason that when you first place the trade, you’ll start off making a small loss.

A currency pair is made of up two currencies traded in the forex market

All currency pairs are quoted in terms of one currency versus another

Each currency pair has a ‘base’, which is the first denoted currency, and a ‘counter’ which is the second denoted currency

Each currency could strengthen (appreciate) or weaken (depreciate). As there are two currencies in each pair, there are essentially four variables you are speculating on when it comes to currency pairs

There are major currency pairs and minor/exotic currency pairs

All forex pairs are quoted in terms of one currency versus another. Each currency pair has a base which is the first denoted currency, and a counter which is the second.

When you place a trade on a currency pair, you’re essentially buying one currency and selling another — but in a single transaction. So for example, going long or ‘buying’ EUR/USD means you’re buying the Euro and selling the US dollar. Going short means that you’re ‘selling’ the Euro and buying the US dollar.

Currency values rise (appreciate) and fall (depreciate) against each other due to a number of economic, geopolitical and technical factors and the forex market is the most traded in the world, with an average turnover in excess of $5 trillion a day. This makes it a highly volatile market and it’s available to trade on 24 hours a day, five days a week (Monday to Friday).

What are the major currency pairs?

Major currency pairs are the most traded currency pairs in the world and it is estimated that trading on those currencies represents over 80% of the whole foreign exchange market. Those currency pairs are: EURUSD, GBPUSD, USDCHF, AUDUSD, NZDUSD and USDCAD.

Out of all the majors, the EURUSD is the most liquid currency pair; meaning that it is the most traded currency pair in the world.