RADEX MARKETS Editorial Team
The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment.
SHARE
Every forex quote shows you two prices. One to buy, one to sell, and a small gap between them. That gap is charged on every single trade you take, before the market has moved a millimetre, and most traders have never actually worked out what it costs them in a month.
I traded for the better part of a year before I did that maths on my own account. The number annoyed me enough that I have paid attention to spreads ever since.
By the end of this article you will know what the spread is, how the formula works, and how to run the calculation yourself with real numbers. You will also know what counts as a good spread, how the cost stacks up over a month of trading, and whether a spread-only account or a commission account suits the way you trade. We finish with the habits worth keeping and the traps worth avoiding.
The spread in forex is the difference between the bid and the ask price, measured in pips, and it is the main cost of entering a trade. Major pairs such as EUR/USD carry the tightest spreads, so they are also the cheapest pairs to trade.
Want to see live spreads for yourself?
The spread in forex is the difference between the price at which your broker will buy a currency pair from you and the price at which it will sell it to you. That one sentence is the whole concept. Everything else in this article is arithmetic and consequences.
The two prices have names. The bid is what you receive when you sell. The ask is what you pay when you buy. Take a EUR/USD quote of 1.08500 / 1.08512, with the numbers here illustrative: the bid is 1.08500, the ask is 1.08512, and the distance between them is 0.00012, or 1.2 pips. You cannot trade at the price in the middle. You always buy at the higher number and sell at the lower one.
That gap is how a broker earns on your trade without sending you an invoice. It is a real cost, but it never appears as a line item the way a commission does. It is simply built into the price you are filled at. Costs that never send an invoice are the easiest ones to forget.
One boundary worth keeping clean: the spread is measured in pips, while the money value of each pip depends on the pair and your lot size. How much a pip is worth is its own topic, covered in our pip guide.
Read more: What are pips in forex and how to calculate their value
Brokers package the spread in three ways: fixed, variable and raw. Same cost, three different shapes, and each shape suits a different kind of trader.
A fixed spread stays the same regardless of what the market is doing, because the broker sets it and holds it there. The appeal is predictability. You know your entry cost before London opens and before the data lands. The catch is that this certainty is priced in: fixed spreads usually run wider than variable ones in calm conditions, and when the market turns violent the broker may protect itself with requotes or slippage instead of a wider spread.
A variable spread breathes with the market. When liquidity is deep, it compresses, and on EUR/USD during the London–New York overlap it can sit well under a pip. When liquidity drains away, it stretches. The same pair that cost you 0.8 pips at lunchtime can cost several times that in the minutes around a rate decision, and there is no way to know the exact figure until you click.
The widest I have personally watched it go was on GBP/USD in the seconds after a UK inflation print: the spread stretched from under a pip to around seven, then settled back within the minute. Anyone who entered on a market order inside that window paid seven times the usual toll for exactly the same trade.
A raw spread account compresses the spread close to the interbank minimum, sometimes near zero, and charges a fixed commission per lot instead. For scalpers and other high-frequency traders the total often works out cheaper. For someone placing three trades a month, the commission maths rarely justifies the switch. The full comparison gets its own section further down, because the marketing around raw accounts deserves a careful look.
The formula is short:
Spread = Ask price − Bid price
The result is read in pips. For most pairs a pip sits at the fourth decimal place; for JPY pairs it sits at the second. So a difference of 0.00012 on EUR/USD is 1.2 pips, and a difference of 0.016 on USD/JPY is 1.6 pips.
Turning pips into money takes one more step:
Spread cost = Spread (pips) × value per pip × lot size
The value per pip changes with the pair and the lot size, which is why the same 1.2-pip spread costs a scalper on standard lots a hundred times what it costs a beginner on micro lots. The pip guide covers those values in detail.
That is the entire toolkit. The next section runs it with real numbers.
All figures in both examples are illustrative.
EUR/USD. The quote reads 1.08500 / 1.08512.
Open that position and it starts $12 underwater. Not because the market moved. Because you entered.
USD/JPY. The quote reads 155.302 / 155.318. The pip is at the second decimal here.
Your platform already shows the spread somewhere on the ticket, so nobody calculates this live before every trade. The point of doing it once by hand is different: you can now check whether the number the platform shows you is normal, and you know precisely what you hand over each time you press buy.
Tighter is better, since the spread is pure cost. But there is no single number that separates good from bad, because normal differs by pair, by broker and by hour of the day. What I can give you is the range that active-session trading usually lives in.
Pair |
Type |
Typical tight spread |
|---|---|---|
| EUR/USD | Major | 0.6 – 1.2 pips |
| GBP/USD | Major | 0.8 – 1.5 pips |
| USD/JPY | Major | 0.7 – 1.3 pips |
| EUR/GBP | Minor | 1.0 – 2.0 pips |
| USD/TRY | Exotic | 30 pips or more, often far wider |
Figures are approximate, as of July 2026, and drift with the broker and the session. Treat them as a sanity check, not a promise.
The useful yardstick: find the normal active-session spread for the pair you actually trade, then hold your broker's quote against it. If your broker's EUR/USD runs at 2 pips while the market norm sits under 1.2, you are paying two-thirds more for the same trade, every trade.
One warning about the word "lowest". A raw account advertising 0.0-pip spreads has not abolished the cost; it has moved the cost into a commission. Good spread means good total cost, and that comparison has its own section below.
The spread is paid at the door. The moment your order fills, the position shows a small loss equal to the spread, and price has to travel that distance in your favour before you reach break-even. On a quiet pair with a tight spread, that toll is small. It is never zero.
Frequency is what turns a toll into a bill. Take a trader on 0.1 lots making 40 round trips a week on EUR/USD at an average spread of 1.2 pips, all figures illustrative. Each entry costs 1.2 × $1 = $1.20, so the week costs about $48 and a month runs near $200 — paid before a single trade has won or lost anything. Scale the same habit to full lots and the month costs roughly $2,000. The market never took that money. The door fee did.
So sensitivity to the spread comes down to how often you walk through the door. A scalper crossing it thirty times a day lives or dies by fractions of a pip. A position trader crossing it twice a month can nearly ignore it. Nearly — it remains part of the bill, alongside slippage and swap, and the slippage article covers its own share of that bill.
Two account models, one cost, collected differently. A standard account folds everything into a wider spread and charges nothing else. A raw or ECN account compresses the spread towards interbank levels and charges a fixed commission per lot on top.
Account type |
Spread |
Commission |
Best for |
|---|---|---|---|
| Standard (spread-only) | Wider, cost built in | None | Low frequency, beginners, simplicity |
| Raw / ECN | Very tight, near interbank | Fixed per lot | High frequency, scalping, active intraday |
The comparison that matters is total cost:
Total cost = spread cost + round-trip commission
Run one trade through both models, figures illustrative. One standard lot of EUR/USD. On the standard account the spread is 1.4 pips and that is the whole story: 1.4 × $10 = $14. On the raw account the spread is 0.1 pips with a $7 round-trip commission: (0.1 × $10) + $7 = $8. The raw account wins by $6 on this trade — and the more trades you take, the more those $6 add up.
Shrink the size to 0.1 lots and the gap nearly closes: $1.40 against $0.80. At three trades a month, the difference buys a coffee. The honest yardstick is that raw plus commission usually rewards high-frequency, larger-volume trading, while a standard account stays simpler and perfectly adequate for low-frequency trading. Neither model is cheaper for everyone, whatever the account page says.
I switched to a raw account during a month when I was trading every London session, and my monthly cost line dropped by roughly a third. A friend who places three trades a month copied the move and saved almost nothing. Same accounts, different doors.
For me the spread earned a permanent place in the trade plan the day I added up a month of scalping costs and found that 163 entries at an average of 1.3 pips had taken more than my worst losing trade that month, one small slice at a time. The figures were mine, but the lesson is portable. The spread is one of the few variables you can see, price and manage before you enter — manage it, and part of your cost is locked down before the chart gets a vote.
The spread is the most transparent of your controllable costs. Watch it, price it into every plan, and it stops being a leak and starts being a known quantity.
The tighter the better, and major pairs in active sessions set the benchmark. EUR/USD typically runs between 0.6 and 1.2 pips in liquid hours; if your broker consistently quotes wider than that, you are paying above the market rate.
Subtract the bid price from the ask price and read the result in pips. To turn it into money, multiply the pips by the value per pip and your lot size.
The spread is the difference between the bid and the ask price, measured in pips. It is the main cost of entering any forex trade.
Mainly liquidity and volatility, shaped further by the pair, the broker and the session. The deeper the liquidity, the tighter the spread — majors in the London–New York overlap are the cheapest trades of the day.
Lower is better, because the spread is a cost. The one caveat is raw accounts, where a very low spread comes with a separate commission — compare the total cost, not the spread alone.
The spread is paid on entry, so price must move one full spread in your favour before the trade earns anything. The more often you trade and the larger your size, the more of your profit the accumulated cost claims.
Variable spreads are usually cheaper while liquidity is deep, and fixed spreads are predictable but tend to run wider in normal conditions. Which suits you depends on when you trade and how much certainty you want.
An account that compresses the spread close to interbank levels and charges a fixed commission per lot instead. It suits high-frequency, active traders — provided the commission is counted into the total cost.
The spread is the gap between bid and ask, and it is the one cost attached to every trade you will ever take. The formula fits on one line, the benchmarks fit in one table, and the compounding is just multiplication — none of it is hard, it only asks to be checked.
What changed my own trading was smaller than a broker switch: I started treating the spread as a number I check before entering, the same way I check my stop — because it is the only cost in this business I can see in full, in advance, every single time.
Read this alongside the guides on pip value and slippage, and your picture of what a trade actually costs is complete.
The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment.
Reviewed by RADEX MARKETS
Risk Warning: Trading derivatives and leveraged products carries a high level of risk, including the risk of losing substantially more than your initial investment.
Related concepts:
การซื้อขายตราสารอนุพันธ์และผลิตภัณฑ์ที่มีเลเวอเรจมีความเสี่ยงสูง และอาจทำให้เกิดผลขาดทุนมากกว่าเงินลงทุนเริ่มต้นของคุณ โปรดอ่านข้อกำหนดและเงื่อนไข (T&C) และเอกสาร Product Disclosure Statement (PDS) ก่อนทำการซื้อขาย
เปิดบัญชี