Forex Leverage and Spreads

Forex Leverage and Forex Spreads are TWO distinct features of Forex Market.

Let's deal with Forex Spread first.

A spread is the difference between BUY and SELL price of a currency pair.

Your broker will give you TWO different prices for the same currency pair - example:

Eur/Usd: 1.5586 (sell) and 1.5589 (buy)

so, if you want to SELL the EUR/USD currency (because you think USD dollar is going to go up) - then you will be able to sell it at 1.5586

IF you are going to BUY the EUR/USD currency(because you think EURO is going up) - then you wil be able to buy it at 1.5589

The difference between buy and sell (1.5589-1.5586) = 3 pips is called the SPREAD.

Spread is basically the broker's fee for opening your trade.