Homonym: spreads (Distributions)
A "spread" refers to the difference between two prices, rates, or values in finance. It is commonly used in various contexts, such as the difference between the buying and selling price of a security, known as the bid-ask spread. Spreads can also indicate the risk or return associated with different investments, helping investors make informed decisions.
In trading, spreads can be categorized into different types, such as fixed spreads and variable spreads. A fixed spread remains constant regardless of market conditions, while a variable spread can change based on market volatility. Understanding spreads is essential for traders and investors to assess costs and potential profits.