The difference between the bid price and the ask price. The bid-ask spread is the transaction cost of executing a round-trip trade.
What Is the Bid-Ask Spread?
The bid-ask spread is the gap between the Bid Price (sell price) and the Ask Price (buy price). For EUR/USD quoted at 1.0850/1.0852, the bid-ask spread is 2 Pips (also written as 0.0002 or 20 Pipettes). This spread represents the primary cost of trading forex.
Spread as a Trading Cost
When you buy EUR/USD at 1.0852 and immediately sell at 1.0850, you lose 2 pips to the spread. For a standard Lot, that is roughly $20 per round trip. Active traders executing multiple trades per day can accumulate significant spread costs. This is why Spread comparison is a major factor when choosing a broker.
Factors Affecting the Bid-Ask Spread
Spreads narrow during high-liquidity periods (London session, New York overlap) and widen during low-liquidity periods (late Asian session, holidays), around major news releases, and during market stress events. The pair's overall liquidity also matters: major pairs have tighter spreads than minors, which have tighter spreads than exotics. Our Pip Value Calculator can help you convert spread pips into dollar costs for your lot size.
Related Terms
Spread
The difference between the bid (sell) price and the ask (buy) price of a currency pair. The spread is the primary cost of making a trade.
Ask Price
The price at which the market (or broker) is willing to sell a currency pair to you. You buy at the ask price. Also called the offer price.
Bid Price
The price at which the market (or broker) is willing to buy a currency pair from you. You sell at the bid price.
Slippage
The difference between the expected fill price and the actual fill price of an order. Slippage occurs when market conditions change during order execution.
Pip
The smallest standard unit of price movement in a currency pair. For most pairs, one pip equals 0.0001. For JPY pairs, one pip equals 0.01.
Ready to trade live?
XM Group. Our pick for beginners. Regulated by CySEC, ASIC, DFSA and IFSC, $5 minimum deposit, micro lots available.
75.33% of retail CFD accounts lose money when trading with this provider.