Banks, cards and currency
Currency exchange: buying and selling rates, spread and how not to lose money
Why the NBU official rate is only a reference, how much the spread costs on an exchange there and back, and how to buy currency in parts.
Spread: what it means
The spread is the difference between the buying and selling price, such as between the rates at which a bank buys and sells currency.
The spread is the difference between the price at which you can buy an asset and the price at which you can sell it. In currency exchange it is the gap between the selling and buying rates: that is how the bank or exchange office earns.
The wider the spread, the more you lose when you change money back and forth. That is why frequent exchanges are a bad deal even when the rate has barely moved.
In exchange trading the spread is also a cost: for a trade to make a profit, the price has to move at least by the size of the spread.
In detail, with examples: Currency exchange: buying and selling rates, spread and how not to lose money
Related terms
Spotted a mistake or an outdated figure? Let us know and we will check it against the primary source and fix it.
Write to redaktsiia@wm2.com.ua: what is wrong and, if possible, a source with the correct information. In Gmail or your mail app the page address will already be in the message.
Read more
Trading and risk
Risk management in trading: how much to risk per trade
The 1-2% rule, a position size calculation on EUR/USD and a table that shows why drawdowns are so hard to win back.