What Is the Spread in Forex and What It Actually Costs You
The spread is the gap between the buy and sell price. Here is how it is built, how to convert it into dollars, and why a zero-spread account is rarely the cheapest one.
Every pair in your terminal has two prices: Bid, where the market buys from you, and Ask, where it sells to you. The gap between them is the spread. It is the first cost of entering a trade, and it is charged instantly — your position opens in the red.
Turning the spread into money
The formula is spread in pips × pip value × volume.
On EUR/USD, one pip (0.0001) is worth $10 on a standard lot. A 1.2-pip spread therefore costs $12 per lot, $1.20 on 0.1 lots, and 12 cents on 0.01 lots.
That arithmetic is brutal for scalpers: ten one-lot trades a day means $120 handed over daily just to get in, before any commission.
Floating vs fixed
A floating spread tracks the market — wider overnight and on news, tighter during the London session. A fixed spread stays put, but the broker prices a buffer into it, so on average it is higher. Fixed suits strategies with rigid risk maths; floating is cheaper in calm hours.
"Zero spread" is a marketing line
Zero-spread accounts exist, but the broker earns through commission instead — typically $3.5 per lot per side, or $7 round turn. Compare accounts on total cost: spread plus commission. A plain account at 1.0 pip is often cheaper than a "zero" account with commission attached.
Run the numbers with the trading cost calculator, or check unusual pairs with the pip value calculator.
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Frequently asked questions
What is a normal EUR/USD spread?
Around 0.8–1.5 pips on a standard account during quiet hours. ECN accounts start from 0.0–0.3 pips but add a commission of roughly $7 per round turn on a standard lot.
Why does the spread widen in the evening?
Once New York closes, far fewer participants are quoting. Less liquidity means a wider gap between the best bid and the best offer. The same happens around major data releases.
Is the spread charged separately?
No. Your trade simply opens at a loss equal to the spread, and only breaks even once price has travelled that distance in your favour.
- Min. deposit
- $50
- Spread
- from 1.0 pip (Standard STP)
- Commission
- $3 per lot per side (Raw ECN)
CFDs are complex instruments with a high risk of losing money