The spread is a cost you pay on nearly every trade — and because it's quiet and built into the price, beginners often overlook it. Understanding it helps you trade more cheaply.
What the spread is
Every market has two prices:
- Bid — the price you can sell at.
- Ask — the price you can buy at.
The spread is the gap between them. The moment you enter a trade, you're slightly down by the spread, because you buy at the ask and could only sell back at the (lower) bid.
Why it exists
The spread is how market makers and brokers get paid for providing liquidity. Tighter spreads mean lower trading costs for you.
What makes spreads wider
- Low liquidity — exotic pairs and thin markets have wider spreads than majors like EUR/USD.
- Off-hours — spreads widen outside the main trading sessions.
- Volatility and news — spreads can blow out around major releases.
Why it matters for your strategy
The shorter your timeframe, the more the spread bites. A scalper targeting a few pips pays the spread on every trade, so it can dwarf the profit — one reason scalping is harder than it looks. Swing traders aiming for larger moves feel it far less.
When you size and plan, account for the spread (and any commission) as part of the real cost of the trade.
The spread is small, frequent and easy to ignore — which is exactly why it quietly adds up.
Education only — not financial advice.