What Is Spread in Forex?

Open an order ticket in MetaTrader and you see two prices for the same pair. The bid is the price at which the market will buy from you — sell orders fill there. The ask is the price at which the market will sell to you — buy orders fill there. The ask always sits slightly above the bid, and the gap between them is the spread.

On five-digit quotes the spread is often stated in points, each one a tenth of a pip: 1.08612 / 1.08624 is 12 points apart, or 1.2 pips. Gaps this small look negligible on screen. The rest of this guide is about why, for an active account, they are not.

The moment a buy order fills at the ask, the position is valued at the bid — so it opens with a small built-in loss equal to the spread. A sell works the same way in reverse. Nothing in the trade history lists this as a fee: it is embedded in the prices you traded at, charged once per round trip (open plus close), win or lose.

On one standard lot of EUR/USD a pip is worth about $10, so a 1.2-pip spread costs roughly $12 per round trip; at 0.10 lots it is $1.20. Because the deduction never appears as a line item, the spread is the easiest trading cost to forget — and for frequently traded accounts it is usually the largest.

Brokers price the spread in one of two broad ways:

Neither model removes the cost — they package the same underlying market spread differently. Fixed trades a wider average for predictability; floating is cheaper most of the time but can widen several-fold at exactly the moments markets move fastest.

A floating spread is a live readout of liquidity. When many banks and dealers quote competitively, the gap compresses; when quotes thin out or prices turn uncertain, dealers protect themselves by quoting wider. The widening clusters in a few predictable situations:

The rollover window matters for anyone holding positions overnight: spreads routinely widen for a few minutes around the broker’s end of day while swap is settled. News spikes combine widening with slippage, so the effective cost of trading through a release is often far higher than either number alone suggests.

How wide a spread sits in normal conditions comes down to liquidity. EUR/USD is the most traded pair in the BIS survey of the FX market and is quoted tightest; an exotic pair— a major currency against a thinly traded one — can be ten to fifty times wider, and wider still outside its home market’s hours.

The break-even arithmetic scales with the gap: a pair quoted 25 pips wide needs a 25-pip move in your favour just to get back to flat — the same logic as on a major, multiplied by twenty.

One spread is trivial; spread times trade count is not. Because the cost is charged per round trip, it scales directly with how often a strategy trades — which makes scalpers and high-frequency EAs the most exposed. The smaller the average profit target, the larger the spread looms next to it.

Run the numbers for your own pairs and sizes with the free Pip Value Calculator, then check them against reality: average spread cost per trade multiplied by the actual monthly trade count in your own MetaTrader history is a number worth knowing before judging any frequent strategy — or letting an EA loose on a symbol it was not tuned for.

Many brokers offer the same market under two pricing models: a spread-only account, where the markup is built into a wider quoted spread, and a raw-spread account, where the gap stays close to the interbank market and an explicit commission is charged per lot instead.

As an illustration, a one-lot EUR/USD round trip might cost 1.4 pips ($14) on a spread-only account, versus 0.2 pips ($2) plus a $7 commission ($9 total) on a raw account. The point is not that either model is cheaper — figures vary by instrument and conditions — but that a fair comparison only works on total cost per round trip.