Spread

The spread is the difference between the price you can buy at and the price you can sell at for the same instrument. It is a core trading cost: the wider the spread, the more the market must move in your favour before you break even. Brokers often compete on spreads, but the important detail is how spreads behave in real conditions (especially around news, low liquidity, and volatile markets).

In plain terms, the spread is the ‘gap’ between the buy price (ask) and the sell price (bid). If you buy and immediately sell, you would typically realise a small loss equal to the spread. Even if a broker advertises “zero commission”, you may still be paying via the spread, so it’s a key cost to understand when choosing a broker.

Spread affects your break-even point and therefore your strategy. If you trade frequently, scalp, or use tight stop-losses, small differences in spread can materially change outcomes. Spreads also matter when markets are moving quickly: a broker that shows attractive “typical” spreads may still widen significantly during volatile periods, which can increase costs and affect execution.

Spread is directly comparable across brokers only when you compare like-for-like:

• Same instrument (e.g., EUR/USD can differ by broker feed and symbol).

• Same account type (standard vs raw/ECN-style).

• Same trading hours and conditions (spreads often widen at rollover, during illiquid sessions, and around major announcements).

For broker selection, spreads should be assessed alongside: regulation, order execution model (market maker vs agency/STP-style), commission schedule, slippage handling, and whether the broker clearly discloses typical vs minimum spreads. Monetisation-wise, this is a key decision lever because users comparing brokers usually start with trading costs—your spread content should naturally lead into comparison pages and broker reviews where pricing is broken down transparently.

• Choosing a broker based on “from 0.0 pips” marketing without checking average spreads and commissions.

• Ignoring spread behaviour during volatility—costs can jump at news events, market opens, and during low-liquidity periods.

• Using tight stops with a broker whose spreads frequently widen, increasing the chance of being stopped out earlier than expected.

• Not checking whether spreads differ by platform, account type, or instrument variant (e.g., different symbols for the same market).

• Confusing spread cost with slippage: they’re related to execution, but not the same—both can increase effective trading costs.

Risk note: spreads are only one part of trading risk. Trading leveraged products (like CFDs) can magnify losses, and spread widening during volatility can increase costs at the worst time.

Suppose a broker quotes GBP/USD at 1.2700 (bid) / 1.2703 (ask). The spread is 0.0003 (3 pips).

• If you buy, you enter at 1.2703.

• If the price immediately ticks down or stays the same, your position will show a small loss because you would sell at 1.2700.

• To break even (ignoring other costs), the bid price would need to rise to at least 1.2703.

Now assume a major announcement is due and spreads widen to 8 pips temporarily. Your break-even distance increases, and tight stop-loss strategies become more vulnerable. This is why it’s important to understand typical spreads in normal conditions and how they behave during volatile periods.