Every instrument has two prices: the bid (what buyers pay you) and the ask (what you pay to buy). The gap is the spread — your broker's built-in fee. Buy EUR/USD with a 1-pip spread and you start every trade one pip in the red.
Why spreads matter more than they look
A 1.5-pip spread on a strategy that targets 10 pips consumes 15% of every winner. The same spread on a 100-pip swing trade costs 1.5%. This is why scalping demands tight-spread conditions while swing trading barely notices — the cost is identical, but relative to the target it is a different universe. More on that trade-off in Scalping Explained.
When spreads widen — and betray you
Spreads are not constant. They widen when liquidity thins: at rollover (2–3 AM PKT), during major news releases, at weekly opens, and on exotic pairs at all times. Beginners who set stops "just past" a level discover that a widened spread can trigger the stop even though the chart never touched it.
Practical defences
- Trade liquid pairs during liquid sessions — the London–New York overlap has the tightest spreads.
- Avoid entries in the minutes around high-impact news unless your plan explicitly covers it.
- Know your pair's normal spread so you notice when it is abnormal.
- On gold and indices, always check the spread before placing a tight stop.
The spread is unavoidable; being surprised by it is optional.
Education only — not financial advice. Trading carries risk of loss; never trade money you cannot afford to lose.
