What is Spread in Forex?
The spread is the difference between the buy price (ask) and sell price (bid) quoted by a broker. It is the primary cost of every forex trade. Understanding spread is essential — it directly affects your profitability, especially for scalpers and high-frequency traders.
How Spread Works — With Numbers
EUR/USD quote: Bid = 1.08490 / Ask = 1.08510
The spread = Ask − Bid = 0.00020 = 2 pips
What this means for your trade:
- You buy EUR/USD at 1.08510 (ask)
- To break even, price must reach 1.08510 (your entry)
- Your position opens immediately 2 pips in the red (at current bid 1.08490)
- You only start profiting once price rises above 1.08510
For a 1 standard lot (100,000 units), 1 pip = $10. A 2-pip spread = $20 cost just to open the position.
Monthly trading cost example:
- 20 trades/month × 2 pips spread × $10/pip = $400/month in spread costs
- This is why tight spreads matter enormously for active traders
Types of Spreads
Fixed spreads: Same spread regardless of market conditions. Common on market-maker accounts. Predictable cost but often wider than variable during normal hours.
Variable (floating) spreads: Change with market liquidity and volatility. Narrow during peak hours (London/NY session overlap), wide during news events or off-peak hours. Standard on ECN/raw accounts.
Zero spread accounts: Raw spread of 0.0 pips — broker charges commission per lot instead. Example: Exness Raw Spread = 0.0 pips + $3.50 commission per side per lot. Better for large lot sizes.
Typical spreads by account type (EUR/USD):
- Exness Standard: 0.3–1.0 pips (no commission)
- Exness Raw Spread: 0.0 pips + $3.50/side
- Exness Zero: 0.0 pips + $3.50/side (same as Raw, different margin requirements)
- Exness Pro: From 0.1 pips (no commission)
How to Choose Based on Spread
Scalpers (hold seconds to minutes): Use Raw Spread or Zero account. Zero pip spread + commission is almost always cheaper than 1+ pip spread when trading frequently.
Day traders (hold hours): Standard or Pro account. Spreads are manageable, no commission simplifies calculations.
Swing traders (hold days): Standard account. Swap fees matter more than spread for multi-day holds.
Math for choosing Raw vs Standard:
- Raw Spread: 0.0 pips + $3.50/side = $7/round trip for 1 lot
- Standard: 0.3 pip average × $10/pip = $3/round trip for 1 lot
- Raw is cheaper if you trade 1 lot; Standard is cheaper at micro lots
Break-even: At 0.7 pips spread on Standard, the costs are equal to Raw at 1 lot. Below 0.7 pips, Standard wins. Above 0.7 pips, Raw wins.
Open Exness Account
Regulated broker, unlimited leverage, instant withdrawals. Available in 170+ countries.
Open Exness Account Free →Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.