Spread

The quotation of a currency pair usually consists of two prices. The lower price (bid) is the price at which a market maker or a brokerage in general is willing to buy the first currency of a pair. The higher price (offer or ask) is the price at which a brokerage is willing to sell the first currency of a pair. The spread is the difference between the two prices. For example if the quotation of EUR/USD is 1.3607/1.3609, then the spread is EUR 0.0002 (or 2 pips). In general, the more popular the pair is, the smaller the differences or spreads. Different brokerage firms have different spreads.