Invast Securities Sandwich Maase Resolves It Immediately! Curious FX Q&A | Part 2: What is the “spread”? From Part 1—Considering the rate generation mechanism

Invast Securities Sandwich Manase

A Level 1 Financial Planning技能士. After working in bank sales of financial products, he joined Invas Securities as a currency dealer. Currently in the Marketing Department, he works to spread the fun of investing to the world. He is reputed as someone who can answer financial questions instantly, and he strives daily to become a reliable big brother loved by everyone.

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Invast Securities Minori

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MinoriRecently, I keep seeing ads from FX companies saying “the spreads are the narrowest in the industry!!,” but first of all, what is a spread?

Sandwich Manase (hereafter, Manase)A spread is the price difference from the investor’s perspective between Bid (selling price) and Ask (buying price).

For example, you might have seen a rate like “Bid: 110.000 Ask: 110.004” for USD/JPY. That means the rate that accepts sell orders is Bid: 110.000, and the rate that accepts buy orders is Ask: 110.004, and the difference of 0.004 yen (0.4 sen) is the spread (see Figure ①).

MinoriI see… but wait, if you “buy” at this rate and then “sell” immediately, you would buy at Ask 110.004 and sell at Bid 110.000. Wouldn’t the net be negative by 0.004 yen, i.e., 0.4 sen?