What does the spread mean for me?
Have you ever seen "no-commission" forex trading advertised and wondered how the broker makes any money? While a broker may not charge any commission on trades, that doesn't mean they offer their services for free.
Instead, rather than charging you a separate flat fee, the spread essentially allows the broker to incorporate their commission as part of your transaction.
This is how brokers make a profit – they sell currency at a higher price than the price they buy at.
Of course, there are also other factors that can affect the size of the spread, including the volatility and liquidity of the currency pair you're trading.
That's why major currency pairs have tighter spreads than emerging market pairs.
