The spread is the difference between the buy and sell price of a currency pair. It is one of the main costs of trading forex and varies depending on the pair, broker, and market conditions.
Every time you open a forex trade, there is a cost built into the price you see on your screen. That cost is called the spread. Understanding it helps you trade smarter and choose the right broker.
The spread is the difference between the **ask price** (the price you buy at) and the **bid price** (the price you sell at).
For example, if EUR/USD shows:
The spread is 0.3 pips. This is the broker's built-in cost for facilitating your trade.
Every trade you open starts at a small loss equal to the spread. Your trade needs to move in your favour by at least the spread amount before you begin to profit.
If you are trading frequently or using small targets, the spread can significantly eat into your profits over time.
When comparing brokers, always check the typical spread on the instruments you plan to trade. A lower spread means lower cost per trade — and lower costs compound significantly over time.
Educational Content Disclaimer: This article is intended for general educational purposes only and does not constitute financial advice or a recommendation to trade. Forex and CFD trading involves significant risk. You may lose some or all of your capital. Always seek independent financial advice if you are unsure whether trading is appropriate for your circumstances.
Need help starting your forex journey?
Contact The Forex Forever for education and account setup guidance.
Book Free Consultation