What is the spread in forex?

The spread is the difference between the price you can buy at (the ask) and the price you can sell at (the bid). It's the most basic cost of every trade — the broker's built-in fee — and it's why a position starts slightly in the red the instant you open it.

Bid, ask, and the gap between them

Every forex quote has two prices: the bid (where the market buys from you) and the ask (where it sells to you). The ask is always a little higher. That gap — measured in pips — is the spread. On EUR/USD it might be 0.8 pips; on an exotic pair it can be many times wider.

Why does the spread exist?

It's how many brokers get paid. Instead of charging a separate commission, they widen the quote a touch and keep the difference. Even on a commission-based account some spread remains, because it reflects the real supply and demand to trade that pair at that moment.

What makes a spread widen?

Two things above all: liquidity and volatility. In deep, active markets — the London–New York overlap on EUR/USD — spreads are tight. In thin conditions — the late Asian session, the seconds around a news release, weekend gaps — they blow out. A spread that's normally 1 pip can jump to 10 or more around a central-bank decision.

Why it matters for your bottom line

The spread is a cost you pay on every single trade, so it compounds. It barely dents a swing trade held for days, but for a scalper taking dozens of trades a day it can be the difference between profit and loss. Always measure your target against the spread: risking 5 pips to make 5 while paying a 1-pip spread is a worse deal than it looks.

Spread and the pip

The spread is quoted in pips, so understanding one means understanding the other — see what a pip is and how to value it. Knowing the pip value of your position tells you exactly what the spread costs you in money, not just in pips.

The takeaway

Treat the spread as the entry fee on every trade. Trade liquid pairs in active hours to keep it tight, avoid trading through the spread-widening seconds around news, and size your targets so the spread is a rounding error — not a headwind you fight on every position.