{"id":13815,"date":"2026-08-27T03:00:42","date_gmt":"2026-08-27T03:00:42","guid":{"rendered":"https:\/\/backcom.io\/?p=13815"},"modified":"2026-09-10T04:39:37","modified_gmt":"2026-09-10T04:39:37","slug":"what-is-forex-spread","status":"publish","type":"post","link":"https:\/\/backcom.io\/en\/what-is-forex-spread","title":{"rendered":"What Is Spread in Forex? How to Calculate It, Types and What New Traders Need to Know"},"content":{"rendered":"\n\n
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What is spread in Forex?<\/strong> The spread is the gap between the Ask<\/strong> price you buy at and the Bid<\/strong> price you sell at, on any currency pair or trading instrument. It is one of the direct costs you pay every single time you open a position.<\/p>\n\n\n\n

The wider the spread, the further price has to travel in your favour before the trade turns profitable. That is why understanding the forex spread<\/strong> \u2014 how it is calculated, why it widens, and how to compare it between brokers \u2014 is groundwork every new trader should cover before going live.<\/p>\n\n\n\n

This guide from Backcom.io<\/strong> covers the Bid\/Ask definition, how to convert spread into pips and into USD per lot, the difference between Fixed and Variable spread, why spreads widen, and how to check a broker’s real spread before you deposit.<\/p>\n\n\n\n

What Is Spread in Forex? Definition and Why It Matters<\/h2>\n\n\n\n

The forex spread is a direct component of your trading cost. The moment you open a position you are almost always sitting on a small unrealised loss \u2014 exactly the size of the gap between the buy price and the sell price.<\/p>\n\n\n\n

Spread = Ask price \u2013 Bid price<\/strong><\/p>\n\n\n\n

\"Forex
Spread defined: the gap between Bid and Ask<\/figcaption><\/figure>\n\n\n\n

The forex spread is usually measured in pips, but for gold, indices or CFDs you also need to check each broker’s quoting convention and contract specification. If CFDs are new to you, start with what CFD trading is<\/a>.<\/p>\n\n\n\n

Spread Is the Gap Between the Bid and Ask Price<\/h3>\n\n\n\n

On MT4, MT5 or a broker app, every instrument carries two prices: Bid<\/strong> is what you can sell at, Ask<\/strong> is what you can buy at. Ask is always the higher of the two, and the distance between them is the spread.<\/p>\n\n\n\n

Take EUR\/USD quoted at Bid 1.08420 \/ Ask 1.08432<\/strong>:<\/p>\n\n\n\n

1.08432 \u2013 1.08420 = 0.00012 = 1.2 pips<\/strong><\/p>\n\n\n\n

Buy EUR\/USD and the order fills at the Ask. Close it immediately, before the market has moved, and it closes at the Bid \u2014 so you absorb exactly that gap. This is why a freshly opened position already shows a negative P\/L.<\/p>\n\n\n\n

The concept is not unique to Forex. The US Securities and Exchange Commission defines the bid-ask spread<\/a> as the difference between the highest price a buyer will pay and the lowest price a seller will accept.<\/p>\n\n\n\n

Why the Forex Spread Exists \u2014 How Brokers Earn<\/h3>\n\n\n\n

Broker revenue comes from the spread, from commission, from a markup added on top of the raw spread, or from other fees depending on the account model. But not all of the spread is broker profit<\/strong> \u2014 cost structures generally split two ways:<\/p>\n\n\n\n