🧱 Basics·beginner

Spread

The difference between the buy (ask) and sell (bid) price — your cost of entering a trade.

The spread is the gap between what you pay to buy and what you get when you sell, at the same moment. If EUR/USD is showing bid 1.09540 and ask 1.09548, the spread is 8 pipettes (0.8 pips). When you click buy, you pay the ask. When you click sell, you receive the bid. The spread is the broker's commission baked into the price. Spreads vary by pair, time of day, and broker. Majors like EUR/USD have the tightest spreads (often 0.5-1 pip). Exotics like USD/ZAR can have 20+ pip spreads. During news events, spreads blow out — a normally 1-pip EUR/USD spread can spike to 20+ pips during NFP. Spread is a cost you pay on every trade. Scalpers who take many small trades feel it most. Swing traders who hold for 50-100 pips barely notice it.

Real trade example

During the Dec 2023 FOMC, EUR/USD's normal 0.8 pip spread blew out to 15 pips in the first 30 seconds after the decision. Traders with market orders got filled 15 pips worse than the screen price.

Related terms

Bid / Ask

beginner

The bid is what the market will pay you to sell; the ask is what the market will charge you to buy.

Pip

beginner

The smallest standard price move in a currency pair — the building block of every forex profit or loss.

Pipette

beginner

One-tenth of a pip — the fifth decimal place on most forex quotes, shown by brokers that quote fractional pips.

Broker

beginner

The company that gives you access to the forex market — the middleman between you and the currency you want to trade.

Balance

beginner

The total cash in your trading account, not counting any open-trade P&L.

Equity

beginner

Balance plus or minus your current floating P&L — what you'd have if you closed every trade right now.

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