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Trading glossary
What Is a Spread in Trading? Bid-Ask Spread Explained
A spread in trading is the difference between the bid price, where you sell, and the ask price, where you buy. You buy at the ask and sell at the bid, so the gap is a cost on every round trip. On one standard EUR/USD lot, a 2-pip spread costs US$20 in a US$ account.
In brief
What is a spread in trading?
The spread is the price gap you cross on every trade. Here is how to measure it, what it costs at different lot sizes and why it is only part of the total cost.
Key takeaways
- A spread in trading is the gap between the bid and the ask. You buy at the ask and sell at the bid, so the gap is paid on every round trip.
- Measure the spread in pips for forex, in points for MetaTrader 5 symbols, and in price per share for stocks.
- Spread cost equals the spread multiplied by pip value and lots. A 2-pip spread costs US$20 on one standard EUR/USD lot, US$2 at 0.10 lot and US$0.20 at 0.01 lot.
- Fixed and variable spreads both change with conditions, so check the spread you will pay during your own trading hours.
- The spread is one cost. Commission and swap or overnight financing can add to it, so compare total cost before you judge a broker by its spread.
The bid-ask gap behind a spread in trading
The bid is the price at which the market will buy from you, so it is what you receive when you sell. The ask is the price at which the market will sell to you, so it is what you pay when you buy. The difference is the spread. For the quote format itself, read bid and ask.
Investor.gov, the US Securities and Exchange Commission's investor site, describes the same mechanism for stock orders. A market order generally executes at or near the bid for a sell and at or near the ask for a buy. The last traded price is not necessarily the fill price.
MQL5 documentation for MetaTrader 5 symbols defines SYMBOL_BID as the best sell offer, SYMBOL_ASK as the best buy offer and SYMBOL_SPREAD as the spread in points.
How to measure a spread in trading
Subtract the bid from the ask to get the spread in price terms. Then convert it into the unit your platform uses. In forex, divide by the pip size. For a symbol that reports points, divide by the point. For a stock, the difference is already in money per share.
On EUR/USD with a bid of 1.0850 and an ask of 1.0852, the gap is 0.0002, which is 2 pips at 0.0001 each. On a five-digit quote the same gap is 20 points at 0.00001 each. The what is a pip guide explains pip size.
| Measure | Formula | Worked example |
|---|---|---|
| Pips (forex) | (ask minus bid) divided by pip size | (1.0852 minus 1.0850) divided by 0.0001 = 2 pips |
| Points (MetaTrader 5 symbols) | (ask minus bid) divided by the point value | (1.08520 minus 1.08500) divided by 0.00001 = 20 points |
| Price per share (stocks, often shown in cents) | Ask minus bid, per share | US$50.02 minus US$50.00 = US$0.02 per share, or US$2 on 100 shares |
Illustrative prices chosen for arithmetic. They are not quotes or forecasts. The point value for a symbol is set in its specification, so check it before you rely on a points figure.
What a spread in trading costs by lot size
The money cost of a spread is pips multiplied by pip value, and pip value rises with lot size. Double the lot, and you double the spread cost on the same quote.
The table uses the EUR/USD example above, in a US$ account, and assumes you open and close at the same quoted price. The forex pip calculator works out pip value for your own lot size and account currency.
| Lot size | Units | Pip value (US$ account) | Spread cost at 2 pips |
|---|---|---|---|
| 1 standard lot | 100,000 | US$10.00 per pip | US$20.00 |
| 0.10 lot | 10,000 | US$1.00 per pip | US$2.00 |
| 0.01 lot | 1,000 | US$0.10 per pip | US$0.20 |
Illustrative only. Your broker's contract size, pip value and conversion rate may differ, and the figures are in US dollars. Convert them into your account currency before you rely on them.
Fixed and variable spreads in trading
A fixed spread is set by the broker and is meant to stay at a stated size under normal conditions. A variable spread, sometimes called a floating spread, moves with the market. MQL5 symbol properties include SYMBOL_SPREAD_FLOAT, which indicates whether a symbol has a floating spread. Read your broker's terms to see which applies to each instrument.
Fixed does not mean certain. Brokers can change their terms in unusual conditions, and a fixed quote can still move in a fast market. A variable spread can be tight in calm, liquid conditions and wide at other times, so one quoted spread is only a snapshot.
- Confirm whether the symbol you trade has a fixed or floating spread.
- Check the typical spread during the hours you trade, not only the best-case figure on the price board.
- Read whether the broker can widen spreads or pause trading in fast markets.
What makes a spread in trading widen
A spread depends on how many buyers and sellers are quoting at a given moment. When liquidity is thinner, the gap between the best bid and the best ask tends to be wider. The size of the effect depends on the instrument, broker and time, so this guide gives no figures for it.
The common causes are these.
- Liquidity: fewer active quotes, particularly in quiet trading hours.
- Session timing: the start and end of a trading session can look different from the middle of it.
- News: scheduled releases and unexpected events can move prices quickly and change the spread for a while.
Spread, commission and swap: the total cost
The spread is one cost. A broker can also charge commission per trade or per lot. Some brokers build their charges into the spread instead. Holding a leveraged position past the broker's rollover time can add a swap or overnight financing charge, which may be a debit or a credit depending on the direction and the broker.
Compare the total cost, not the spread alone. The commission and swap figures below are hypothetical, not any broker's fee schedule.
| Cost | What it is | Illustrative amount |
|---|---|---|
| Spread | Ask minus bid, paid when you open and close | US$20 at 2 pips |
| Commission | Fee per trade or per lot, if your broker charges one | Hypothetical US$6 round trip (US$3 per side) |
| Swap or overnight financing | Charge for holding past the rollover time | Hypothetical US$1.50 for one night |
| Total | Sum of the costs above for one trade held one night | US$27.50 in this hypothetical case |
Illustrative only. Commission, swap and spread are set by each broker and vary by instrument, direction and time. Use your broker's cost schedule for real figures.
A lower spread is not always the lower cost
In this hypothetical example, before swap, Broker A has a 2-pip spread and a hypothetical US$6 commission, so the round trip costs US$26. Broker B has a 2.4-pip spread and no commission, so the round trip costs US$24. Broker B is cheaper in this example, even though its spread is wider.
Why scalping and day trading feel the spread in trading
The spread is paid on each round trip, so a strategy that trades often pays it often. Scalping aims for small moves over seconds or minutes, so the spread can be a large share of each result. The what is scalping guide shows how that cost builds up.
Day trading repeats the cost across a session, so the total adds up even when each trade is small. The table uses the same 2-pip spread and 1 standard lot.
| Scenario | Spread per round trip | Gross target | What the spread takes |
|---|---|---|---|
| Scalp, 1 standard lot, 5-pip target | US$20 (2 pips) | US$50 (5 pips) | 40% of the target |
| Day trade, 1 standard lot, 10 round trips | US$20 each | Varies by trade | US$200 in spread before commission |
Illustrative arithmetic, not a forecast of any trade. The scalping guide uses a 1-pip assumption; a 2-pip spread doubles that spread cost.
How to check a spread in trading on a demo account
- 01
Open a demo account
Use the broker and platform you plan to trade with. Demo spreads and fills may not match live conditions, so treat the demo as a learning step.
- 02
Add the instrument and read both prices
Add the symbol to your watch list. In MetaTrader 5, the Market Watch window shows the bid and ask for each symbol.
- 03
Calculate the spread
Subtract the bid from the ask. Convert the result into pips or points using the pip or point size for that symbol, then into money using the pip value for your lot size.
- 04
Record it at several times
Note the spread at the open, mid-session, in a quiet hour and around a scheduled news time. One reading is a snapshot, not your average cost.
- 05
Add the other costs
Take commission and any swap or overnight financing figures from your broker's fee schedule and symbol specification. Add them to the spread to get the total cost of a planned trade.
Risk disclosure
- A spread is paid on every trade, so frequent trading multiplies the cost even when each trade is small. FINRA notes that frequent intraday trading comes with risks, including losing some or all of the investment.
- Spreads can widen without warning. In fast markets a stop order can fill beyond the stop level, and the spread at fill time can be wider than the spread you checked earlier.
- Leverage can magnify gains and losses. The spread cost is calculated on the full position, so a larger lot raises the cash cost of the same spread.
- Costs reduce results. Spread, commission and swap are usually charged whether a trade wins or loses, so a small gross move can become a loss.
- This page is educational and is not personal financial advice. Forex, CFD and stock trading can lose money quickly.
RTX5 status
RTX5 is Orrnn's trading terminal and broker-technology product. Its Windows desktop client is in preview, and the web and mobile clients are planned. A Google Play listing for Android is published, but the mobile client has no approved release record yet; check the product-availability record and release notes before relying on any RTX5 feature. RTX5 is not a broker and does not set the spread on your account. The spread figures on this page are illustrative.
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Primary references
Sources were checked on 7 November 2026. They explain market rules and concepts; they do not certify RTX5 or provide individual financial advice.
Investor.gov: Types of OrdersSays a market order generally executes at or near the bid for a sell and the ask for a buy. Supports the buy-at-ask and sell-at-bid explanation for stocks. It does not define spread size.MQL5 documentation: Market information identifiersDefines SYMBOL_BID as the best sell offer, SYMBOL_ASK as the best buy offer, SYMBOL_SPREAD as the spread in points, and SYMBOL_SPREAD_FLOAT as an indication of a floating spread. Supports the bid, ask and spread-unit definitions. It gives no typical spread sizes.FINRA: Day tradingPage dated 4 June 2026. Says frequent intraday trading comes with risks, including losing some or all of the investment, and lists trading costs such as commissions and fees. It does not discuss spreads.RTX5 product availabilityRTX5 status record. Use it to check which RTX5 products and clients are live before relying on any feature.
Questions readers ask
What is a spread in trading?
A spread in trading is the gap between the bid price, where you sell, and the ask price, where you buy, for the same instrument. Opening and closing a position at the quoted prices costs you the gap. Forex and CFD spreads are usually measured in pips or points, and stock spreads are measured in price per share.
Is a lower spread always cheaper?
No. A lower spread is only one cost. A broker with a tighter spread may charge a commission or higher swap, so the total can be greater. Spreads also change with the time of day and with news, so a low quote at a quiet moment may not be what you pay in your session. Compare total cost at the same lot size and hours.
How do I calculate the spread?
Subtract the bid from the ask. On EUR/USD with a bid of 1.0850 and an ask of 1.0852, the difference is 0.0002. Divided by the 0.0001 pip size, that is 2 pips. To turn it into money, multiply the pips by the pip value for your lot size and account currency. On one standard lot in a US$ account, 2 pips is US$20.
What is the difference between a fixed and a variable spread?
A fixed spread is set by the broker and is meant to stay at a stated size under normal conditions. A variable or floating spread moves with the market. Neither is certain in every condition, so read the broker's terms and check the typical spread in your trading hours.
Does the spread in trading apply to stocks as well as forex?
Yes. Stocks also have a bid and an ask, and a market order generally fills at or near the bid for a sell and the ask for a buy. The gap is the spread, measured in price per share. Commission and fees are separate, so check your broker's disclosures for each product you trade.
Do scalpers pay more spread than swing traders?
At the same quoted spread, each round trip costs the same. The difference is frequency. A scalper who opens and closes many trades pays the spread many times, and a small gross target leaves less room to absorb it. A swing trader who holds for longer pays the spread fewer times over the same period.
Keep learning
Bid and ask priceHow the bid and ask prices are quoted and which one you pay when you buy or sell.Forex pip calculatorWork out pip value and the money value of a spread for your pair, lot size and account currency.What is leverage in trading?How leveraged positions magnify both gains and losses, and how a spread scales with position size.What is a CFD?Contracts for difference, which carry a spread and financing costs.What is trading?The basics of trading instruments, orders, costs and risk.