Spread

The spread is the bid-ask difference quoted on an instrument, and it represents the most immediate cost of trading in forex, where many brokers charge little or no separate commission. Spreads can be fixed (the broker holds them steady) or variable (they widen and narrow with liquidity and volatility). They are typically tightest on major pairs during active sessions and widest on exotic pairs or around news and session gaps. Because you cross the spread on both entry and exit, it directly affects your break-even point and compounds quickly for high-frequency styles. Reviewing the spreads you actually paid — not just the headline rate — is part of understanding your true cost of trading.

In plain English — The spread is the difference between the price you can buy at (the ask) and the price you can sell at (the bid). It exists because the broker or market maker quotes two prices, and that gap is effectively a fee you pay to enter and exit. A new trade starts slightly negative because you must overcome the spread before you reach break-even. Tighter spreads mean lower costs, especially if you trade frequently.

EUR/USD shows a bid of 1.1000 and an ask of 1.1001 — a 1-pip spread. The moment you buy, you are down about 1 pip (roughly $10 on a standard lot) until price moves in your favour.