Spread
Spread is the difference between an asset's sell price (bid) and buy price (ask). It is the cost paid on every trade the instant it opens, measured in pips and converted to cash through pip value. Run this calculation now: minimum win rate calculator
Fixed, variable and what changes on news
A fixed spread does not move with the market; a variable spread widens in low-liquidity hours and on news, and it is the most common kind. A pair trading at 1 pip during the London session can go to 10 or 20 in the second of a rate announcement — and a market order in that second pays all of it.
'Raw' or ECN accounts show a spread near zero and charge a commission per lot; 'standard' accounts bake the commission into the spread. Total cost is what matters, and it only shows up when you add the two.
What it costs and what it does to the win rate
Spread cost = spread in pips × pip value. On EURUSD with a 1-pip spread and 0.5 lot, that is 5 dollars per trade. With a 10-pip stop (50 of risk), the spread is 10% of risk — and the minimum win rate of a 1:1 strategy rises from 50% to 55%.
The shorter the stop, the heavier the spread. It is why scalping demands a very low spread and a high win rate at the same time.
FAQ
Is the spread charged on entry or on exit?
In practice on entry: the position opens already negative by the size of the spread, because it buys at the ask and is valued at the bid (or the reverse on a sell).