The spread is the difference between the bid price and the ask price in the market. It represents the cost of entering a trade.
Bid price: The price at which you can sell an asset
Ask price: The price at which you can buy an asset
In our trading accounts the spread are determined by the broker of your choice and varies depending on several factors, such as the asset you are trading, market conditions, and liquidity.
Typically, spreads are tighter (lower) in highly liquid markets such as major currency pairs during peak trading hours, and they can widen during periods of low liquidity or high volatility.
Periods of low liquidity or high volatility usually occur during:
Market opens and closes
Major economic news releases
Holidays or weekends, as fewer market participants are trading
Unexpected global events such as geopolitical tensions or natural disasters
Spreads directly impact your trading costs, as a wider spread means you need a bigger price movement to reach profitability.