9 min read A spread in trading is the difference between the bid price (where you can sell) and the ask price (where you can buy). It’s the first cost you pay on almost every position. Buy at the ask, sell at the bid, and that small gap is what the market keeps.
How the bid-ask spread works
Every tradable market shows two prices at once. The bid is the highest price a buyer will pay. The ask (also called the offer) is the lowest price a seller will accept. The ask always sits a little above the bid, and the distance between them is the spread.
Say EUR/USD shows a bid of 1.0850 and an ask of 1.0851. The spread is 0.0001, or one pip. Buy at 1.0851 and the moment you’re filled, the market will only buy it back from you at 1.0850. You’re down one pip before the price has moved at all.
On a standard lot of EUR/USD, one pip is worth about $10, so that one-pip spread costs you roughly $10 to get in and straight back out. Widen the example: if GBP/USD quotes 1.2740 bid and 1.2745 ask, the spread is five pips, and the round-trip cost is five times bigger.
Crypto behaves the same way. If BTC/USD shows a bid of $60,000 and an ask of $60,030, the spread is $30. The size changes from market to market. The mechanic doesn’t.
The spread is a cost, not a fee
A fee is a separate line item you can see leave your account. A spread isn’t. It’s baked into the price you get, which is exactly why new traders miss it. Nothing gets charged. You simply start each position slightly underwater, and the price has to travel past the spread before you’re in profit.
Platforms price this in one of two ways. Some charge a visible commission and keep the spread close to the raw market level. Others run a spread-only model: zero commission, with their cost built into a slightly wider spread instead. PrimeXBT uses the spread-only model on forex and crypto CFDs, with 0% commission on its PXTrader and MT5 platforms, and its pricing is built to keep those spreads tight and stable. In that model the spread works as a near-hidden commission: it’s how the broker and the market makers quoting prices get paid, and it’s how high-frequency traders earn a living off differences most people never notice. Spread figures move with the market, so check current pricing before you trade.
What makes a spread tight or wide
Spreads aren’t set by a rule. They move with the state of the market, and three forces do most of the work.
Liquidity is how easily an asset trades without shoving the price around. Deep liquidity pulls the bid and ask close together. Trading volume runs alongside it: more participants who agree on price means a tighter spread. Volatility pushes the other way. When prices change rapidly, the firms quoting them widen the spread to cover the risk of being caught on the wrong side.
A tight spread also signals agreement, with buyers and sellers roughly concurring on what the asset is worth. A wide one signals the opposite: no consensus on value. Underneath all three forces sits plain supply and demand, which decides where the bid and ask land in the first place.
Put together, they explain most of what you’ll see on screen:
| When this is true | The spread tends to be |
|---|---|
| High liquidity and volume (EUR/USD in the London session) | Tight |
| Low liquidity (an exotic pair, or the market’s quiet hours) | Wide |
| Calm, range-bound prices | Tight |
| A news release or a sharp move | Wide, sometimes for only seconds |
That’s why a major forex pair can cost a fraction of a pip while an exotic pair, or the same pair thirty seconds after a rate decision, costs many times more.
Fixed vs variable spreads
A variable spread floats with the market, tightening when things are calm and widening when liquidity dries up or volatility jumps. Most forex and crypto pricing works this way. A fixed spread stays the same number whatever the market does, trading a little predictability for a slightly higher baseline. If you ever watch a spread that never moves, you’re looking at a fixed model; if it breathes with every tick, it’s variable.
The other spreads: options, bonds, and betting
“Spread” has many meanings in finance, and they all describe a gap between two numbers. The bid-ask spread is the one most traders mean, but a few others are worth knowing so the word never trips you up.
In options trading, a spread is something you build, not something the market quotes. You buy and sell multiple options contracts on the same underlying asset at once, with different strike prices or expiration dates, and the spread is the net cost or credit of the combination. A debit spread costs money up front; a credit spread pays you up front. A bull call spread caps both your risk and your reward while you position for a rise. A bear put spread does the same for a fall. A long butterfly spread stacks several contracts to profit when the price barely moves, and a calendar spread pairs the same strike price across two expiration dates. These are positions a trader constructs, a long way from the single bid-ask gap.
In bond markets, a spread compares yields. The yield spread is the gap between the yields of two bonds, and it measures a risk premium: a corporate bond usually yields more than a government bond of the same maturity, and that extra yield is the credit spread investors demand for taking on more risk. Move interest rates or the benchmark rate, and those spreads move with them.
The word travels further still. In spread betting, a leveraged product offered only in some markets, you stake an amount per point of price movement, and a buy/sell spread is still built into the quote. In sports betting, a “point spread” or a “half point” has nothing to do with markets at all. Those are different games. This article is about the trading spread: the bid-ask gap you pay on a position.
How to keep the spread from eating your returns
You can’t delete the spread. You can stop it quietly draining an account.
Trade liquid markets when they’re busy: EUR/USD during the London or New York session shows tighter spreads than the same pair at 3 a.m. Watch the spread around scheduled news, because it can balloon for a few seconds right when you’re tempted to react. And weigh the spread against your holding period. Five pips barely registers on a multi-week position. The same five pips can wipe out the edge of a scalper trading dozens of times a day. The shorter you hold, the more the spread matters.
Two more costs ride alongside it. Leverage multiplies position size, so it multiplies the cash value of the spread you pay on entry, which is part of why high-leverage trading carries a high risk of losing money. And in a fast market you can get slippage on top of the spread: a fill at a worse price than the screen showed.
Trade forex and CFDs on PrimeXBT to watch live spreads move across markets, or work through the rest of the PrimeXBT trading glossary for the terms that sit around this one.
Trading involves risk.
What counts as a good spread?
For major forex pairs, a fraction of a pip to about a pip is normal in active hours. For exotic pairs, several pips is common. There's no universal "good" number; judge it against the asset and the moment.
Why did my spread suddenly widen?
Usually liquidity dropped or volatility spiked. A news release, a market open or close, or thin overnight trading all widen spreads, sometimes for only a few seconds.
Is the bid-ask spread a hidden fee?
In a spread-only, zero-commission model it's close to one. You're never charged a separate line item, but the gap between buy and sell prices is how the broker and market makers get paid. It's a real cost, just an invisible one.
Is the spread the same as slippage?
No. The spread is the gap between bid and ask at the moment you trade. Slippage is getting filled at a worse price than you expected, usually because the market moved between your click and the fill. You can pay both on the same trade.
Do you buy at the bid or the ask?
You buy at the ask and sell at the bid, every time. That's the whole reason the spread costs you anything.
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