Every time you open a trade, there is a small built-in cost called the spread. Understanding it is one of the easiest ways to trade smarter and keep more of your profits. This guide explains what the spread is, how it is measured, why it changes, and how to pay less.
What is the spread in forex?
The spread is the difference between the buy price (ask) and the sell price (bid) of a market. When you open a trade you start slightly in the negative by exactly this amount — so the spread is effectively your cost of entry.
Example: if EUR/USD is quoted as 1.0800 / 1.0801, the spread is 1 pip. You buy at 1.0801 and could immediately sell at 1.0800 — the 1-pip gap is the cost.
How is the spread measured?
In forex the spread is measured in pips (see what is a pip). On gold, indices and crypto it is measured as a price gap in dollars or points. The tighter (smaller) the spread, the less you pay to trade.
What a spread costs you
Cost = spread × pip value × lots. On 1 standard lot of EUR/USD (where 1 pip = $10), a 1-pip spread costs about $10 to enter a trade. On a micro lot it is just $0.10.
Why do spreads change?
- Liquidity: major pairs like EUR/USD have the tightest spreads; exotic pairs are wider.
- Volatility: spreads can widen during big news or thin markets.
- Trading session: spreads are usually tightest during the busy London–New York overlap.
- Account type: Raw-spread accounts show near-zero spreads plus a commission; Standard accounts bundle the cost into a slightly wider spread.
Spreads at SCapitalFX
You choose how you pay your spread cost:
- Standard account: spreads from 1.0 pip on EUR/USD, with no commission — simple, all-in pricing.
- Raw account: spreads from 0.0 pips on EUR/USD plus a small $6 round-turn commission — usually cheaper for active traders.
See the full breakdown in Standard vs Raw account.
How to pay less in spreads
- Trade liquid major pairs (EUR/USD, GBP/USD) rather than exotics.
- Trade during active sessions when spreads are tightest — see best time to trade.
- Use a Raw account if you trade often or in size.
- Avoid trading right into major news, when spreads can widen.
Risk warning: Trading forex and CFDs on margin carries a high level of risk and may not be suitable for everyone. You could lose some or all of your invested capital.
Frequently asked questions
Is the spread the only cost of trading?
On a Standard account, the spread is your main cost. On a Raw account you pay a smaller spread plus a fixed commission. Holding trades overnight may also incur a swap fee.
What is a good spread in forex?
For EUR/USD, anything around 1 pip or below is competitive. Raw accounts can offer near 0.0 pips plus commission.
Why did my spread suddenly get wider?
Usually because of low liquidity or high volatility — often around major news or at the daily rollover.
Standard or Raw — which has the lower cost?
For frequent or larger trades, Raw is usually cheaper once you include commission. For small or occasional trades, Standard is simpler.
Start trading with tight spreads
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