Woalet

Bid-Ask Spread

The difference between the highest price a buyer will pay and the lowest price a seller will accept for a currency.

Full Explanation

In currency trading, the bid price is what buyers will pay for a currency, and the ask price is what sellers want. The spread is the difference between these two prices. This spread is how market makers and payment providers make profit. A tighter spread (smaller difference) is better for you. For example, if USD/EUR bid is 0.85 and ask is 0.86, the spread is 0.01 (1 cent).

Related Terms

Foreign Exchange (FX)

The global market where currencies are traded. Also the rate at which one currency can be exchanged for another.

Exchange Rate

The price at which one currency can be exchanged for another currency.

Mid-Market Rate

The real exchange rate between two currencies as determined by the global market, without any markup or margin.

Frequently Asked Questions

What is a reasonable spread?

For major pairs, 0.3-0.8 pips is tight. For exotics, 1-2% spread is typical.

How does spread affect my transfer?

Spread is essentially the FX cost to you. Tighter spread = better rate = less you pay.

Can I get mid-market rate?

Most consumer providers can't offer mid-market. Woalet gets very close for institutional clients.

Does spread change?

Yes, spreads widen during volatile markets and when markets are closed.