I know there are spreads and that's how the brokers make their money. But I was wondering if it was when you buy AND sell that there is a spread. So if there was an average .05 spread for say EUR/JPY then to buy and sell your spread cost would be .10? So you would need to make more than .10 to make a profit? Is this correct?
You only pay the spread once. For example, say you are buying EUROS with USD. The quote is 1.4200 bid and 1.4201 ask. So you buy at 1.4201. Then say you immediately sell with the quote unchanged. So you sell at 1.4200. The difference between you buy and sell is 0.0001 which is the spread. It's not 2 X the spread.
Hi there, Spread is the difference between bid and ask and you pay this to your broker as a fee .. calculated in units of 'pips'. I am a client of WSD global markets and they charge me 0.5 pips on EURUSD which is amazing. A pip is the 4th decimal of a quote.