What Is the Spread in Forex? Cost Explained (2026)

The Desk’s Guide

By Ken Chigbo, Founder, KenMacro, 18+ years across discretionary and systematic strategies, UK macro desk.

Find Ken on X @realkenchigbo · YouTube @Realkenchigbo · MACRO MASTERY Discord

Updated 2026-05-22

The bid-ask spread and why it is a cost on every trade

Every forex broker quotes two prices simultaneously. The bid is the price at which the broker buys the base currency from you. The ask is the price at which it sells the base currency to you. The spread is the difference between those two numbers, quoted in pips. When you open a long trade on EUR/USD, you buy at the ask. If you immediately closed that trade, you would sell at the bid, which is below the ask. You would be down by the spread before the market has moved a single tick in your direction. The spread is therefore an entry cost on every single trade, regardless of whether the trade is a winner or a loser. A broker with a tighter spread gives back more of each winning trade in net profit.

Standard account versus Raw or ECN account

Most brokers offer two broad account structures. On a Standard account, the broker marks up the raw interbank spread before quoting you. The spread might be 1.2 pips on EUR/USD when the underlying interbank market is at 0.1 pips. That 1.1 pip markup is how the broker earns its money, and there is no separate commission. On a Raw or ECN account, the broker passes through the underlying spread as close to 0.0 pips as liquidity allows, but charges a separate per-lot commission in cash, usually expressed as a dollar amount per round-turn (the combined cost of opening and closing one standard lot). Both models can be more or less expensive depending on how often you trade and in what size. The maths matters, and the desk will show it below.

How to calculate your real all-in cost per trade

For a Standard account, the formula is simple. Spread in pips multiplied by pip value in your account currency, multiplied by the number of lots. On a standard lot of EUR/USD with a 1.2 pip spread, pip value is roughly 10 USD, so cost is 1.2 multiplied by 10, which gives 12 USD per round-turn. For a Raw or ECN account, add the commission to the spread cost. If the spread is 0.1 pip on EUR/USD (a 1 USD spread cost per standard lot) and the commission is 6 USD round-turn, total cost is 7 USD per standard lot. Compare that to 12 USD on the Standard account and the Raw account is cheaper by 5 USD per trade, at one lot. Scale that to ten lots per trade, or fifty trades per month, and the difference compounds materially. On a micro lot (0.01 lots), the commission-bearing Raw account may cost more than Standard for the same trade, because the commission is applied regardless of size. Know your typical trade size before choosing an account type.

When Standard is cheaper and when Raw wins

Standard accounts favour infrequent traders and very small lot sizes, where the commission on a Raw account would exceed the savings from a tighter spread. If you place two or three swing trades per week at 0.01 to 0.05 lots, a Standard account with no commission is often cleaner and cheaper in practice. Raw accounts favour active traders, scalpers, and anyone trading larger sizes. Once you are trading 0.5 lots or more per trade, or are placing more than ten to fifteen trades per month, the tighter spread and transparent commission structure of a Raw account almost always reduces your total cost. The desk’s own trading has been exclusively on Raw or ECN accounts since the early years, simply because the economics favour it at any meaningful size.

The desk’s honest take on these three brokers

The table above shows the desk’s three CPA partners compared on cost. Blueberry Markets is the primary recommendation for traders who want ASIC regulation (AFSL 535887) alongside tight raw spreads. That regulatory layer matters if you want a Tier-1 authority behind your account. VT Markets offers Raw ECN at a similar spread level with commission, regulated by the offshore Mauritius FSC for most international clients, leverage up to 1:1000, and a lower minimum deposit. Star Trader operates Prime ECN with reportedly competitive commission and higher leverage but is offshore (FSA Seychelles) and per FXEmpire’s published review does not permit scalping, which matters if your strategy involves holding trades for minutes. For cost-conscious active traders who want Tier-1 oversight, Blueberry is the desk’s primary recommendation. For those who want maximum leverage and a lower barrier with ECN execution, VT Markets fits. Verify every figure at signup. Spreads change with liquidity conditions and broker promotions.

Frequently asked

What is a pip in forex?

A pip is the smallest standardised unit of price movement for most currency pairs, equal to 0.0001 for pairs quoted to four decimal places (such as EUR/USD). For JPY pairs quoted to two decimal places, one pip is 0.01. Spreads and profits or losses are most commonly quoted in pips, which then convert to a cash amount based on your lot size and account currency.

Is a lower spread always better?

A lower spread reduces your entry cost, but it is only one part of the total cost picture. On a Raw ECN account, you also pay a per-lot commission that does not appear in the quoted spread. Always calculate the all-in round-turn cost (spread cost plus commission) before comparing brokers. A 0.0-pip spread with a 10-USD commission can be more expensive than a 1.0-pip spread with no commission, depending on your lot size.

What causes spreads to widen?

Spreads widen when liquidity drops. This happens most reliably in the seconds around high-impact news releases such as NFP or FOMC, at the daily market open and close, during public holidays when interbank activity is thin, and in overnight sessions on low-volume pairs. Wider spreads mean a higher entry cost and a higher cost to exit a losing trade quickly. This is particularly relevant for news traders and scalpers.

Does spread affect where my stop loss is triggered?

Yes, in practice. Your stop is measured from the bid price for long trades and from the ask price for short trades. If the spread widens temporarily to 5 pips during a news event and your stop is 8 pips away on a long, a 3-pip adverse move during that widened-spread window is enough to trigger the stop, even if the mid-price never actually reached your level. Sizing down around high-volatility events reduces this risk.

Can I trade forex without paying a spread?

No. The bid-ask spread is structural to how foreign exchange markets work. Even on a Raw ECN account with a 0.0-pip spread at certain moments, you pay commission per lot, and the spread is never persistently zero in practice because liquidity fluctuates. The goal is to minimise your all-in round-turn cost, not to eliminate it. Choosing an account type that suits your trading frequency and size is the practical lever you actually control.

KenMacro has commercial partnerships with one or more of the brokers referenced and may earn a commission if you open an account. Scores and rankings are editorial and independent of commission. Educational analysis only, not financial advice. Trading leveraged products carries a high risk of loss. Verify regulation by entity and current terms on the broker’s own site before funding any account.