What is spread in forex?

Definition Spread is the difference between the ask price and the bid price of a symbol, a cost paid on every trade because a position opens at one of the two prices and closes at the other.

Spread in forex is the gap between the ask, the price you buy at, and the bid, the price you sell at. A position opens at one of those prices and closes at the other, so every trade starts down by the spread, which makes it the main cost of a trade on accounts that charge no separate commission.

MetaTrader’s help defines it plainly: “the difference between the Bid and Ask prices” (MT5 help: Market Watch). Swap and commission, where charged, come on top.

Spread in forex: points, pips and money

MT5 shows the spread in points. To see it, right-click Market Watch (Ctrl+M) → Columns → Spread. The symbol’s Specification window gives the “spread in points”, or says that it is floating.

Spread in MT5 (EURUSD, 5 digits)	In price	In pips	Cost on 1.00 lot, USD account	On 0.10 lot
8 points	0.00008	0.8	$8	$0.80
15 points	0.00015	1.5	$15	$1.50
30 points	0.00030	3.0	$30	$3.00

Worked example

Against a stop the spread weighs differently: 1.2 pips is 12% of a 10-pip stop and 2.4% of a 50-pip stop.

When the spread widens

A floating spread moves with liquidity: the fewer and wider the quotes behind your broker’s price, the wider it gets. It tends to widen:

at the daily rollover, 5 pm New York time: see why spreads widen at rollover and the forex market hours tool for your clock;
around high-impact releases such as NFP and CPI, covered in high-impact news in forex;
in thin markets, such as public holidays and the Sunday open.

A wide spread can also close trades. A short position’s stop loss is checked against the ask, which the chart does not draw by default, so a spike can trigger it while the bid on the chart stays below the level. See bid and ask price and slippage.

Common mistake: judging cost by the typical spread

An advertised typical or minimum spread is not the spread on your order. You pay the spread at the moment the order fills, which at rollover or on a news release can be several times the usual figure. Watching the Spread column around the hours you trade shows how your own broker behaves.

Spread limits in automated trading

An Expert Advisor can check the live spread right before each order. In PipWarden you can set a Max spread per pair, in points. If you set one, it is checked on the server when the signal is evaluated and again by the EA with the live bid and ask just before the order is sent. A trade over the limit is skipped and logged as “Spread too wide”. A separate news blackout blocks new entries on a pair from 60 minutes before to 30 minutes after a high-impact release for either of its currencies, by default.

Both checks apply to new entries only. Open trades keep their stops through rollover and news, and prices can gap past them.

Frequently asked questions

How much does a 1-pip spread cost?

On a pair quoted in US dollars, one pip on 1.00 lot is $10, so a 1-pip spread costs $10 on 1.00 lot, $1 on 0.10 lot and $0.10 on 0.01 lot. A new position starts that far below zero.

Why do spreads widen?

When liquidity thins, fewer and wider quotes reach your broker, so the best bid and the best ask sit further apart. That tends to happen at the 5 pm New York rollover, around high-impact news and in thin holiday markets.

Is the spread in MT5 shown in pips or points?

In points. A EURUSD spread of 12 in Market Watch is 1.2 pips, and one of 30 is 3.0 pips.

Educational content, not financial advice. Forex and CFDs are traded on margin and are high risk: you can lose money, and more than your deposit with some brokers. Examples use made-up numbers and show no real results. Read the risk disclosure.