Spread
The spread is the gap between the best sell price (ask) and the best buy price (bid). It is a hidden cost of every trade: the wider the spread, the pricier the entry.
How it works
The bid is the best price someone will pay you if you sell. The ask is the best price someone will sell to you if you buy. The ask is always above the bid, and the gap between them is the spread.
You buy at the ask, but your position is immediately valued at the bid, so every trade starts slightly negative by the size of the spread. In forex the spread is measured in pips, in crypto in dollars or as a percent of price.
Spreads are tight on liquid instruments during active hours and widen at night, on news, before weekends and on illiquid coins. Brokers offer floating or fixed spreads, and some charge a commission instead of a wide spread.
EUR/USD: bid 1.0850, ask 1.0851. The spread is 1 pip. On 1 standard lot one pip is worth $10, so the trade costs you $10 right at entry.
BTC: bid $60,000, ask $60,010. The spread is $10, about 0.017% of the price. On an illiquid coin the spread can be 1–2%, and the trade has to move that much just to break even.
A common mistake is looking only at commission and ignoring the spread. It hurts most with frequent short trades and when trading the news, when spreads can widen several times over. Check the spread before you enter, trade in active hours and include it when you set your stop and target.
Questions and answers
What is a spread in simple terms?
It is the difference between the buy price and the sell price at the same moment. In effect it is what you pay the market or broker for being able to trade right away.
Why does the spread widen?
When there are fewer participants and orders, or the market moves sharply, buyers and sellers move apart. It happens at night, around major news and before weekends.
Is a fixed or floating spread better?
A floating spread is usually tighter in calm markets but can jump on news. A fixed spread is predictable but often wider on average, and in a fast market you may still get slippage.
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Updated: 2026-10-19