What Is the Spread in Forex?

The spread is the difference between a pair's bid (the price you can sell at) and its ask (the price you can buy at), measured in pips. It's the most important number most beginners ignore: in standard forex, the spread is your main trading cost.

Why the spread is a cost

A pair is always quoted with two prices — say EUR/USD bid 1.0849 / ask 1.0851. You buy at the ask (the higher one) and sell at the bid (the lower one). So the moment you open a buy, it's valued at the bid and you're already down the 2-pip spread. Price has to move in your favour by the spread just to reach break-even.

What makes spreads wider or tighter

• The pair. Major pairs (EUR/USD, USD/JPY) are deeply liquid and have the tightest spreads; minors and exotics are wider.
• Liquidity and time of day. Spreads tighten when the major sessions overlap and widen in thin hours.
• Volatility. Around big news, spreads can blow out as liquidity thins.
• The broker and account type. Some brokers fold their cost into a wider spread; others quote a raw, tight spread plus a separate commission.

Fixed vs. variable spreads

• Variable spreads move with the market — usually tighter when it's calm, wider around news.
• Fixed spreads stay constant — a little more on average, but predictable when volatility spikes.

How to keep spread costs down

• Trade liquid major pairs when their sessions are active.
• Avoid trading through major news unless that's the strategy.
• Compare brokers on the all-in cost (spread plus any commission), not the headline spread alone.

Back to the basics: What is forex trading? · the unit you measure it in: What is a pip?.