The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller will accept (ask). This spread represents the transaction cost in forex trading.
The spread affects your trading costs - a narrower spread means lower costs. Major currency pairs typically have tighter spreads due to higher liquidity, while exotic pairs have wider spreads.
Market makers and liquidity providers help maintain tight spreads by continuously offering to buy and sell currencies. Their competition typically results in better pricing for traders.
