Spread
The gap between the bid and ask price. It is the cost of getting in and out of a trade, paid the moment you open one.
The spread is the difference between the ask (what you pay to buy) and the bid (what you get when you sell). It is measured in pips.
Open a trade and you are instantly down by the spread. On a busy major pair that might be under a pip. On an exotic, or during a news explosion, it can balloon to many pips in a heartbeat.
Spreads widen when liquidity dries up: late at night, over holidays, or right as big news hits. Trade often with wide spreads and the toll quietly drains you.
What a spread costs
- EUR/USD quote: 1.0848 bid / 1.0850 ask.
- Spread = 1.0850 − 1.0848 = 0.0002 = 2 pips.
- On a standard lot ($10 a pip): 2 × $10 = $20.
- On a mini lot ($1 a pip): 2 × $1 = $2.
Bottom line: Every standard-lot round trip on this quote costs $20 before the market does anything.
Ignoring spread on short, fast trades. If you aim for 5 pips and the spread is 2, you are giving away 40% before you start.
Keep this word for good
Your free Private Swap Lounge saves the terms you’ve learned and quizzes you on them. Portal under construction. Expected delivery date is December 01, 2026.