A forex spread is determined by **the difference between the bid price and the ask price**.

This difference is commonly expressed in **pips**, which serve as the fundamental unit of measurement in forex trading.

Most currency pairs are quoted to the fourth decimal place, with a pip representing the smallest increment, which equals 0.0001.

For instance, in a currency pair such as EUR/USD, if the bid price for the base currency (EUR) is 1.0931 and the asking price for the quote currency (USD) is 1.0934, the spread would be calculated as 1.0934 minus 1.0931, resulting in a spread of 3 pips.

Note that** 1 pip is equivalent to 10 points**