With the development of social and economic level, everyone's life is getting richer and richer. What can you do with money? Qian Shengqian is of course used to make more money, and investment has become everyone's best choice. Some people choose stocks, while others choose futures. Foreign exchange has also become the goal pursued by many young people. Many people often see some new words in the process of speculating foreign exchange, but they don't know what they mean, such as forward, swap and foreign exchange spread used in settlement. Today, let's take a look at what the foreign exchange spread is and how it is calculated.

What is the foreign exchange spread?

The foreign exchange spread is essentially the difference between the buying price and the selling price. Because investors make profits by trading one currency against another in the process of foreign exchange trading, foreign exchange trading currencies are often quoted at the current price compared with another currency. For the convenience of viewing and understanding, we usually write these currencies in pairs, such as AUD/USD. In this example, the Australian dollar belongs to the "base currency" and the US dollar is called the "relative currency".

Foreign exchange dealers will generate spreads when they conduct foreign exchange transactions online, and these spreads are the profits of foreign exchange dealers. Foreign exchange spreads are affected by many factors, such as market demand for a certain currency, money supply, money liquidity and so on. Generally speaking, the bigger the market, the more active it is, and the lower the spread.

The bigger the spread, the higher the seller's price and the lower the buyer's price. Therefore, the more you pay when you buy, the less you get when you sell, and it is difficult to make a profit. In addition, in the market, some companies will offer floating spreads.

Spreads seriously affect investors' trading strategy income. Traders are very willing to buy low and sell high, but high spreads mean buying high and selling low, so traders' profits will be lower.

How to calculate the price difference?

In foreign exchange transactions, there is a difference between the buying price and the selling price. For example, when USDJPY quotes 120.00/120. 10,120.00 is the selling price and10 is the buying price. When GBPJPY quotes 185.50/ 185.60, the price difference is 10 point.

Generally speaking, the more active and larger the market, the lower the spread, for example, the spread of euro/dollar and pound/dollar is lower than that of other non-major currencies. On the other hand, the smaller the market, the smaller the currency circulation, and the larger the price difference provided by the market, and the price difference of goods provided by traders is an important factor affecting whether customers choose this trader.