SPREAD CHART

Nearly all financial vehicles can be plotted as some form of a spread chart based on some unique properties of the underlying instrument. In futures markets, a spread chart usually implies the comparison of a forward expiry month with a distant ex- piry month in the same commodity. Within spot currency markets, a spread chart is defined specifically as the difference between the bid price and the ask price, which currency dealers use as the transaction cost for a round-turn trade in that cur- rency pair. The ask price is the price that the trader pays when entering the market in a long position; the bid price is used when the trader enters the market short.
The currency spread chart is plotted as a channel chart in which the upper bound- ary is the bid price and the lower boundary is the ask price. The importance of the spread chart is that it is the most common method used to display streaming data in online trading platforms. The trader can readily see the buying price (the lower boundary) and the selling price (the upper boundary).