What is a spread (and why it is your real cost)
The gap between buy and sell is the first bill you pay on every trade. Here is how to read it.
Every market quotes two prices: the bid (what you can sell at) and the ask (what you can buy at). The gap between them is the spread, and it is the first cost you pay on every single trade — before commissions, before swaps, before anything.
A worked example
Say EUR/USD is quoted 1.0850 / 1.0851. If you buy at 1.0851 and the price does not move, selling immediately gives you 1.0850. You are down one pip straight away. That one pip is the spread — the broker's cut for making the market.
Why it matters more than the headline
Brokers advertise "spreads from 0.0 pips". The word from is doing a lot of work. Real average spreads depend on the account type, the pair, and the time of day. A spread that is 0.2 pips during the London session can widen to 2 pips at the illiquid daily rollover. This is exactly why Broker Almanac measures average spreads at real session times, from funded accounts, instead of repeating the marketing number.
What to do with this
- Compare the all-in cost: spread + commission, not spread alone. A "zero spread" account with a per-lot commission can cost more than a tight-spread account with none.
- Trade the sessions when your pair is liquid (London and New York for majors). Spreads are tightest then.
- Avoid trading through major news the moment it drops — spreads blow out and slippage bites.
The spread is not a fee you can see on a statement. It is baked into the price. That is exactly why beginners underestimate it.
Ready to pick where to trade?
Once the basics click, match to a broker that fits your country and capital.