Bid, ask and spread

Open a trade and close it one second later. Nothing happened in the market, yet your account is slightly smaller. That gap is the spread.

Two prices, not one

BaseQuoteBidAskSpread

The bid (1.0850) is the price the broker pays you. If you sell EUR/USD, you sell at the bid.

Every quote has a bid and an ask. The spread is the gap between them.

Your broker always shows two prices:

• The bid is what the broker will pay you. You sell at the bid.
• The ask is what the broker will charge you. You buy at the ask.

The ask is always a little higher than the bid. The difference is the spread, and it is the main way most brokers get paid.

The spread is paid immediately

The moment you buy at the ask, the trade could only be closed at the lower bid. So a new trade starts slightly in the red, by exactly the spread. The price has to move in your favour by at least that much before you break even.

Spreads vary by pair and by time of day. EUR/USD during the London session might be 0.5 to 1 pip. An exotic pair at midnight could be 20 pips or more.

Try it

Trades per weekSpread (pips)Trade sizeMicro lot (1,000)Mini lot (10,000)Standard lot (100,000)

Per trade

Per week

Per year (48 weeks)

Spread cost = spread in pips × pip value for your trade size. It is paid on every trade, whether it wins or loses.

At the calculator’s starting values, a 1-pip spread on 10 mini-lot trades a week costs about $480 over a 48-week year.

Quick check

1. Question 1 of 3

   EUR/USD is quoted 1.0850 / 1.0852. At which price can you buy?

   A1.0850B1.0852C1.0851, the midpoint

Go deeper: Bid, ask and spread in forex · Exotic Currency Pairs: Should Beginners Trade Them?