Spread Indicator

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DEFINITION of 'Spread Indicator'

An indicator that shows the difference between the bid and ask price of a security, currency or asset. The spread indicator is typically used in a chart to graphically represent the spread at a glance, and is a popular tool among forex traders. The indicator, displayed as a curve, shows the direction of the spread as it relates to the bid and ask price. Usually, highly liquid currency pairs have lower spreads.

BREAKING DOWN 'Spread Indicator'

Spreads are calculated metrics that often requires that a trader manually determine the difference between bid and ask prices. For traders trying to capture small fluctuations in the spread, determining the spread requires handling quotes with a large number following the decimal. As a result, the spread indicator fluctuates over a very narrow range.

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RELATED FAQS
  1. How is the value of a pip determined?

    A pip in foreign exchange trading is a measure of a price movement in a currency pair. "Pip" is an acronym for price interest ... Read Full Answer >>
  2. Where did the term 'pip' in currency exchange come from?

    The term pip is an acronym for percentage in point or price interest point. It measures a unit of change within a pair of ... Read Full Answer >>
  3. What is the difference between pips, points, and ticks?

    Point, tick and pip are terms used to describe price changes in the stock market and other markets. While traders and analysts ... Read Full Answer >>
  4. What are the nations with the lowest PPP (purchasing power parity) with respect to ...

    Purchasing power parity (PPP) is one of several economic indicators used to compare how much goods cost from country to country. ... Read Full Answer >>
  5. What's the difference between bid-ask spread and bid-ask bounce?

    Although both the bid-ask spread and the bid-ask bounce relate to the bid-ask price of a stock or other investment, they ... Read Full Answer >>
  6. Are Downside Tusuki Gap patterns important when trading forex pairs?

    The most heavily intertraded national currencies on forex markets are often referred to as "commodity pairs," "the majors" ... Read Full Answer >>

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