Every trade opens slightly in the red. Not because the market moved, but because you bought at the ask and would sell at the lower bid. That gap is the spread, and it is the first cost you pay on every single trade.
The Definition
It is small, it is constant, and it is paid by you on every trade you take.
The spread is the difference between the bid price, where you can sell, and the ask price, where you can buy. The ask is always the higher of the two. The gap between them is the spread.
You pay it the moment you enter, before the market moves at all. You buy at the ask, but the position is marked at the bid, so it opens in the red by exactly the spread. Price has to move in your favour by the spread just to break even.
It is the broker or market maker's compensation for quoting a price you can trade against instantly. It is measured in pips or points, and on many accounts it is the single largest cost of trading.
How It Is Measured
The number is tiny. The frequency is what makes it matter.
A EUR/USD bid of 1.0840 and ask of 1.0841 is a 1 pip spread. On indices and crypto it is quoted in points or ticks instead.
The broker holds the spread constant regardless of conditions. Predictable for costing trades, but usually wider than a variable spread on calm markets.
Floats with live supply and demand. It can be very tight on liquid pairs in quiet hours and blow out around news and the open.
Fewer participants and faster moves stretch the gap. The same trade can cost several times more around a release than minutes before it.
Raw or ECN accounts show a tighter spread but add a separate commission. The real transaction cost is the two added together, not the spread alone.
One spread is trivial. Paid across hundreds of trades it becomes one of the biggest lines in your results, and it is invisible in a raw P&L number.
Why It Matters
The market move is uncertain. The spread is not. You pay it every time, win or lose.
| Scenario | Spread Impact | Who It Hurts Most |
|---|---|---|
| Tight spread, few trades | Minimal | Position and swing traders |
| Wide spread, scalping | Severe | Scalpers and high-frequency traders |
| Major news release | Spikes sharply | Anyone entering into the event |
| Illiquid or exotic pairs | Persistently high | Traders away from major pairs |
| Market open and close | Wider than mid-session | Open and close session traders |
The Point Most Miss
Every strategy starts each trade behind by the spread. The faster you trade, the more it dominates.
Price must move by the spread before you are flat. A tight stop and a wide spread can mean the spread is a large share of the risk on the trade.
When targets are a handful of pips, a 1 pip spread can eat a third of the move. It is the central cost in any scalping journal.
A higher cost per trade means you need more winners to stay profitable. Check the maths with a win rate calculator.
A cost that looks negligible per trade becomes a major drag over hundreds of trades. Volume turns a rounding error into a real number.
News, the open, weekends and exotic pairs all widen it. Entering into those conditions quietly multiplies the cost of the same setup.
Costs belong in the plan, not as an afterthought. Sound risk management counts the spread before the trade, not after.
The Real Problem
Type in your entry and exit by hand and the spread and commission quietly vanish from the numbers.
Ignoring spread in a manual journal
Your P&L looks better than it was.
Tracker Fx
Synced P&L already reflects real costs.
Supported Platforms
Connect your account and the spread and commission are captured automatically from then on. No CSV files, no imports.
cTrader
Connects via the official cTrader API. Full history imports on connection and leverage is captured on every new trade.
Learn about cTrader → 14-day free trial included
Bybit
Connects via read-only API key (Bybit Global). Leverage captured on Perpetuals and Spot, synced every 2 hours.
Learn about Bybit → 14-day free trial included
OANDA
Connects via the OANDA API. Forex, indices, commodities and metals with leverage tracked from connection.
Learn about OANDA → 14-day free trial included
MetaTrader 4 & MT5
Connects via API to any MT4 or MT5 broker. No plugins and no CSV exports - leverage synced automatically.
Learn about MetaTrader → Requires a paid planFAQ
The spread is the difference between the bid price, where you can sell, and the ask price, where you can buy. It is a cost you pay on every trade the moment you enter, before the market moves at all. A position opens slightly in the red by exactly the spread. It is measured in pips.
The bid is the highest price a buyer will pay, the price you sell at. The ask is the lowest price a seller will accept, the price you buy at. The bid-ask spread is the gap between them, and it is the broker or market maker's compensation for providing a price you can trade against instantly.
It behaves like one. You do not see a separate line item, but you pay it on entry because you buy at the ask and would sell at the lower bid. On many accounts the spread is the main transaction cost. On commission accounts you pay a tighter spread plus a separate commission, and the two together are the real cost. See risk management for how to plan around it.
Variable spreads widen when liquidity drops or volatility spikes: around major news releases, at market open and close, over weekends, and on thin or exotic pairs. Fewer participants and faster price moves mean the gap between the best bid and best ask grows, so the same trade costs more to enter. It matters most for the scalping style.
Yes. Tracker Fx includes a 14-day free trial with full access to all journaling and analytics features. The free trial is available for all platforms except MetaTrader, which requires a paid plan.
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