Forex Spreads Explained: What You Pay on Every Trade
The spread is the gap between the price you can buy at and the price you can sell at. You pay it on every trade, so understanding it matters, especially for short-term traders.
The spread is the difference between the bid and ask price, and you pay it on every trade. Major pairs such as EUR/USD are usually tightest; spreads widen in quiet hours, around news and on exotic pairs. A one-pip spread on one standard lot costs about $10.
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A quote has two prices: the bid (where you can sell) and the ask (where you can buy). EUR/USD 1.10000 / 1.10008 has a spread of 0.8 pips. A new trade starts slightly negative by exactly that amount.
What the spread costs
On one standard lot of EUR/USD, each pip is about $10, so a 0.8-pip spread costs about $8 per round trip, plus any commission. Use the pip value calculator for other pairs and sizes.
Fixed vs variable spreads
Variable (floating) spreads move with market liquidity: tight in busy sessions, wider when it's quiet. Fixed spreads stay the same in normal conditions but are usually wider on average. Commission-based "raw" accounts show very tight spreads and charge a separate fee per lot.
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Play free, no signup →When spreads widen
- Around major news releases.
- At the daily rollover, often around 5 pm New York time.
- In quiet sessions and holidays.
- On exotic pairs, which have wide spreads all the time.
Why spreads matter more for short-term traders
A 1-pip cost is minor on a 100-pip swing trade and huge on a 5-pip scalp. The shorter your targets, the bigger the share of each trade the spread takes, which is why scalpers obsess over execution costs.
Frequently asked questions
What is a spread in forex?
The difference between the bid (sell) and ask (buy) price. It's a cost paid on every trade.
What is a good spread for EUR/USD?
EUR/USD usually has among the tightest spreads, often well under a pip on commission-based accounts in liquid sessions.
Why do spreads widen at night?
Liquidity drops around the daily rollover and in quiet hours, so there are fewer prices on offer and spreads widen.
Is a zero-spread account free?
Usually not. Zero or raw-spread accounts typically charge a commission per lot instead.
Keep learning
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