The spread is the gap between the price you can buy at (Ask) and the price you can sell at (Bid). It is built into these prices rather than deducted as a separate spread fee.
How Does the Spread Affect Position?
Your trade opens and closes using different sides of the quote:
| Position | Opening price | Closing price |
| Buy | Ask | Bid |
| Sell | Bid | Ask |
This price difference is why a newly opened position may initially show an unrealised loss.
The market must move sufficiently in your favour to cover the spread and any other applicable charges before your trade generates a net profit.
How Is the Spread Calculated?
Spread = Ask Price − Bid Price
Suppose EUR/USD is quoted at 1.08500 / 1.08520:
- Bid price: 1.08500
- Ask price: 1.08520
- Spread: 0.00020, or 2 pips
For EUR/USD, one pip equals 0.0001. If you buy at 1.08520 and immediately close at an unchanged Bid price of 1.08500, the difference represents the spread cost.
How Much Does the Spread Cost?
Spread Cost = Spread in Pips × Pip Value per Standard Lot × Number of Lots
For a 0.5-standard-lot EUR/USD position, assuming a pip value of USD 10 per standard lot:
2 pips × USD 10 × 0.5 lot = USD 10
The USD 10 is reflected in the difference between your opening price and the price at which you could close immediately. It is not deducted again as a separate spread fee.
Use the pip value applicable to your product and account currency when calculating the cost.
Is Commission Included in the Spread?
No. Commission is a separate trading charge that may apply in addition to the spread.
Commission conditions depend on your account type and the product you trade. A lower spread does not necessarily mean a lower total trading cost.
Before trading, check:
- The spread.
- Any applicable commission.
- Other charges, such as overnight holding costs.
Risk Warning
Trading Contracts for Difference ("CFDs") and other leveraged financial derivatives involve a high degree of risk and may not be suitable for all investors. Leverage can magnify both gains and losses, and you may lose all of your invested capital. You should ensure that you fully understand the risks involved before trading.
The information provided on this website is for general information purposes only and does not constitute investment advice, a recommendation, or an offer or solicitation to buy or sell any financial instrument.