When you look at a trading platform, every financial asset has two prices: a bid price and an ask price. The difference between those prices is the spread.
Understanding spreads helps you estimate trading costs and compare account types.
What is a spread?
The spread is the difference between the buy price and sell price of a currency pair or CFD.
- Bid price: The price used when you sell.
- Ask price: The price used when you buy.
The ask price is normally slightly higher than the bid price. The gap between them is the spread. When you open a trade, the position usually starts slightly negative by the value of the spread.
How spreads are measured
Forex spreads are usually measured in pips. For most currency pairs, one pip is the fourth decimal place, or 0.0001.
Example:
| Price type | EUR/USD quote |
|---|---|
| Bid | 1.0850 |
| Ask | 1.0851 |
The spread is:
1.0851 - 1.0850 = 0.0001
That equals 1 pip.
If you open a buy trade at 1.0851, the market needs to move above the spread before the trade moves into profit, before other fees or adjustments.
Why spreads change
Most major markets use variable pricing, so spreads move throughout the trading day.
Common reasons include:
- Liquidity: Spreads tend to be tighter when more buyers and sellers are active.
- Volatility: Economic news, central bank decisions, and unexpected events can widen spreads.
- Time of day: Spreads often widen during the daily rollover period when fewer liquidity providers are quoting.
Spread structures across TabTrade accounts
TabTrade account types are designed for different trading styles and cost preferences.
Standard Account
The Standard Account uses spread-only pricing. Broker execution costs are built into the spread, with no separate trading commission on opening or closing a trade.
This can be simpler for newer traders because the trading cost is visible in the spread.
Edge Account
The Edge Account is designed for active and high-frequency traders. It offers access to raw-style market pricing with spreads from 0.0 pips on selected instruments, plus a separate commission.
The Edge commission is $3.50 USD per side, or $7.00 round turn, per standard lot traded.
Related costs
Spreads are not the only possible trading cost. Depending on your account and trade, you may also need to consider:
- Overnight swap or financing adjustments
- Trading commissions
- Currency conversion
- Payment provider fees
Read more about swaps and trading commissions.