Every forex quote shows two prices, like a currency exchange booth with a "We buy" and "We sell" board.
- Bid: the price you can sell at.
- Ask: the price you can buy at.
- Spread: ask minus bid. That's the cost of entering a trade.
Example
EUR/USD shows 1.08500 / 1.08512. Spread = 1.2 pips. Buy 1 lot and close instantly and you lose about $12. Every trade starts a little in the red.
Standard vs raw pricing
Some accounts charge no commission but a wider spread. Others give raw spreads from 0.0 pips plus a fixed commission (often around $6–7 per lot round trip). For active traders, raw usually wins.
When spreads explode
- At the daily rollover (~5 pm New York).
- During big news like NFP or rate decisions.
- On exotic pairs and in quiet hours.
Wick says
I once opened a trade at rollover. The spread was so wide I was down 15 pips before price even moved. Never again!
Key takeaways
- Buy at the ask, sell at the bid.
- The spread is a cost you pay on every trade.
- Compare brokers on spread + commission, not marketing.