<h2>Spreads in Forex Trading</h2>
<p>Spreads are a fundamental concept in forex trading, representing the difference between the bid and ask prices of a currency pair. They are the cost of trading, similar to a commission or fee, but built into the price of the instrument.</p>

<h2>How It Works</h2>
<p>In forex, prices are quoted in pairs, such as EUR/USD. The first currency is the base currency, and the second is the quote currency. The bid price is the price at which you can sell the base currency, while the ask price is the price at which you can buy it.</p>
<p>For example, if the EUR/USD spread is 1.4 pips, it means you can sell EUR at 1.18514 and buy it back at 1.18528.</p>
<p>Spreads can vary depending on the liquidity of the currency pair, market conditions, and the broker's policy. Some brokers offer variable spreads, while others provide fixed spreads.</p>

<h2>Why It Matters for Traders</h2>
<p>Spreads directly impact your trading costs and, consequently, your profitability. A wider spread means a higher cost per trade, reducing your potential profits. Here's why it matters:</p>
<ul>
  <li><strong>Trading Costs</strong>: Spreads are the primary cost of trading forex. A wider spread increases your costs, while a narrower spread reduces them.</li>
  <li><strong>Profitability</strong>: To make a profit, your trade must exceed the spread. In other words, if you're trading with a 1.4 pip spread, your trade must move 1.4 pips in your favor to break even.</li>
  <li><strong>Leverage</strong>: With leverage, even a small spread can significantly impact your trading costs. For instance, with a 1:300 leverage, a 1.4 pip spread on EUR/USD can cost you $70 per lot.</li>
</ul>

<h2>Example</h2>
<p>Let's say you're trading EUR/USD with a spread of 1.4 pips and a leverage of 1:300. You open a long position of 1 lot (100,000 units of the base currency).</p>
<p>If the price moves 2 pips in your favor, your profit would be $14 (2 pips * $7 per pip). However, if the price moves only 1 pip, you would still lose $7 (1 pip * $7 per pip), as your trade hasn't covered the spread yet.</p>

<h2>Key Takeaways</h2>
<ul>
  <li>Spreads are the cost of trading in forex, representing the difference between the bid and ask prices.</li>
  <li>Narrower spreads reduce your trading costs and increase your potential profits.</li>
  <li>With leverage, even a small spread can significantly impact your trading costs.</li>
  <li>When choosing a broker, consider the spreads they offer, as they can vary significantly between brokers. STB Provider, for instance, offers competitive spreads on its MetaTrader 5 platform.</li>
</ul>