GLOSSARY
Spread
The gap between the two prices you are quoted — and for most beginners, the largest single cost of trading.
Updated 2026-09-04 · Educational content · No broker owns this site
Quick answer. The spread is the difference between the ask price and the bid price of a currency pair, usually measured in pips. It is the cost of opening a position: a trade must move in your favour by at least the spread to break even.
Your broker quotes EUR/USD as 1.08420 / 1.08430. Subtract the lower from the higher and you get 0.00010 — one pip. That is the spread.
It is the clearest cost in trading and the one most often overlooked, because it never appears as a line item. It is simply built into the two prices.
How much does a spread actually cost?
Convert it from pips into money, which depends on position size. On EUR/USD one pip is worth $0.10 per 1,000 units, so a 1.0 pip spread costs:
Trace it through end to end. You buy one mini lot at the ask: 10,000 × 1.08430 = $10,843.00. You immediately sell at the bid: 10,000 × 1.08420 = $10,842.00. You are down $1.00, and the market never moved.
Why do spreads change?
Spreads reflect how easily a pair can be traded at that moment. Heavily traded pairs are cheapest: the BIS Triennial Central Bank Survey for April 2025 reports that the ten most traded currency pairs all involve the US dollar, with the dollar on one side of 89.2% of all trades. Thinner pairs — and any pair during a news release, at rollover, or in quiet hours — cost more.
Spreads may be fixed (constant, usually wider) or variable (moving with the market, usually tighter but capable of widening sharply). Some accounts advertise near-zero spreads and charge a separate commission instead; the honest comparison is spread plus commission together, never one in isolation.
Does the spread hurt some traders more than others?
Considerably. The spread is charged per trade, so its damage scales with how often you trade, not with how long you hold. A trader targeting 10 pips who pays a 1 pip spread gives up 10% of the target on every position. A trader targeting 100 pips gives up 1%. Frequent trading on small targets is where spread costs quietly consume an account — and because each individual charge looks trivial, the total is easy to miss until it is large.
The mistake beginners make
Comparing brokers on advertised spreads alone. Marketing figures usually quote the tightest spread, on the busiest pair, during the busiest hours — not the average you will pay. What matters is the typical spread on the pairs you actually trade, at the hours you actually trade, plus any commission. Trading is risky and you can lose money; treating a low headline spread as evidence a broker is cheap is one of the easier ways to pay more than you expected.
Related terms
- Bid Price — the lower price — where you sell
- Ask Price — the higher price — where you buy
- Pip — the unit spreads are quoted in
- Currency Pair — why some pairs are cheaper than others
Every term above is part of the same idea: how a forex price is written down and what it costs you to trade on it. Start at currency pair if you are reading these for the first time, or browse the full glossary.