What spread is and how it is paid
Spread is the difference between bid and ask. Bid is the price at which the trader can sell; ask is the price at which the trader can buy. The Forex pair is bought at the ask and sold at the bid, so one round trip costs one full spread: half at entry and half at exit, measured from the mid price, when the spread is the same at both ends.
This is not a fee billed separately. It is the structure of the price quote itself. Who keeps the spread depends on how the account is priced: a broker that makes its own market earns the difference between the ask its buyers pay and the bid its sellers receive, while a broker that prices from liquidity providers passes their spread through and earns a markup, a Commission or both, as its terms set out.
A spread of 1.2 pips on EUR/USD on a 1 standard lot position is $12 per round trip, and it shows as an unrealised loss the moment the position opens, because a long position is valued at the bid. If the spread is the same at exit, the market must move 1.2 pips in the trader's favour before the position reaches breakeven.
Spread cost across a trading week
Spread is not a one-time cost. It applies to every round-trip trade. A trader running 20 round-trip trades per week on EUR/USD at an average 1.2-pip spread on 1 standard lot pays 20 × 1.2 × $10 = $240 per week in spread alone.
On a $10,000 account, that is a 2.4% weekly drag — before any consideration of swap, Commission, or strategy edge. Annualised at 50 trading weeks, the drag is 120% of starting equity. The strategy must produce 1.2 pips of favourable movement per trade to break even on spread cost.
Trade frequency and average spread are the two levers on this cost. Cutting from 20 round-trip trades per week to 10 halves it; cutting the average spread from 1.2 pips to 0.5 pips at a tighter broker more than halves it again. An account type with a narrower spread often adds a per-lot commission, which this figure does not include.
Variable spread and when it widens
On raw-spread accounts, which add a separate commission, the variable spread floor on EUR/USD typically sits at 0.1–0.3 pips during the London-New York session overlap (13:00–17:00 UTC while neither the UK nor the US is on daylight saving time, 12:00–16:00 UTC while both are, 12:00–17:00 UTC in the weeks when only the US is); commission-free standard accounts quote a wider variable spread, and the broker sets both. The spread widens as Market maker depth retreats in thinner hours and around data releases. On an account priced from an ECN or an aggregator, the quote is built from the prices several liquidity providers stream, so the spread is the gap between their best bid and best ask, plus any markup the broker's terms add, and it changes whenever the two move by different amounts.
Around major scheduled releases (US Non-Farm Payrolls, CPI, FOMC decisions), spread widens further as market makers reduce quoted size to limit adverse selection; as an illustrative figure that varies by broker and account type, it can reach 5–10 pips on EUR/USD.
A plain Stop-loss 10 pips from entry becomes a market order when it triggers and fills at the stop level or worse; a stop-limit instead places a limit order and can stay unfilled. On MetaTrader, and by default on cTrader, a long position's stop triggers on the bid, so a spread that widens can trigger it sooner. When the next available price is already beyond the stop, the fill carries slippage: with 5 pips of slippage the loss is 15 pips rather than 10. This is mechanics, not malfunction: whether the broker passes on its liquidity providers' wider quote or widens its own, the Order types that fill at market (market and stop orders specifically) carry the slippage when liquidity withdraws.
Fixed versus variable spread
Fixed-spread accounts quote a set spread in normal conditions and price it above the variable floor; whether the broker holds it through data releases and thin hours, widens it, or returns a Requote instead is set in its terms. Illustrative figures, which vary by broker: 1.5–2 pips fixed on EUR/USD, against a 0.1–0.3-pip floor during peak liquidity on a raw-spread account, which adds a Commission.
Where the broker holds it, a fixed spread gives cost predictability through data releases and low-liquidity periods. Variable spread is materially cheaper during peak hours but exposes the trader to widening at the worst times.
The correct comparison is the average paid across the actual trading pattern, not the minimum advertised. Spread is paid only when a position opens or closes, so what matters is when the trades fill, not how long they are held. A trader whose entries and exits, stops included, fill in thin hours and around US data releases pays the variable account's widest spreads, not its floor, and for that pattern a fixed spread can work out cheaper on average. On a variable account, a trader who opens and closes only in peak liquidity pays close to the floor.
Spread on instruments other than forex
CFD positions on equity indices, commodities, and crypto all carry spread structured the same way: one bid-ask gap per round trip. The figures differ by instrument and broker. As illustrative assumptions, since each broker sets its own: a CFD on a major index at 0.4–1.5 points of spread, a crude oil CFD at 3–6 cents per barrel, a major crypto pair at 0.05–0.5% of the price.
Index spread in points is comparable to forex spread in pips only after multiplying by the contract value per point. At an illustrative 5,200, the S&P 500 with a 0.5-point spread on a contract worth $10 per point carries a $5 spread cost. The unit changes; the principle does not.