Day 008 / 404 · Forex Foundations · May 5, 2026

What is spread in forex?

Spread is the gap between the price you can buy at (ask) and the price you can sell at (bid). It's measured in pips. On EUR/USD, a typical spread during London hours might be 0.8 pips. Every trade sta

The gap you pay every time

When you open a forex trade, you'll see two prices on your platform: the bid (the price at which you can sell) and the ask (the price at which you can buy). The difference between them is the spread.

If EUR/USD shows:

Bid: 1.08500
Ask: 1.08508

The spread is 0.8 pips.

You pay that gap immediately. If you buy at 1.08508 and want to close the trade one second later with zero market movement, you'll sell at 1.08500. You're down 0.8 pips before the market even twitches.

Fixed vs variable spread

Some brokers offer fixed spreads — the gap stays the same no matter what's happening in the market. Others offer variable spreads that widen during low liquidity (like the Asian session or right after major news).

Fixed sounds safer, but it's usually wider on average. Variable can be tight during peak hours (London and New York overlap), but it can spike to 5 or 10 pips during a surprise central bank announcement.

Neither is inherently better. It depends on when and how often you trade.

Why scalpers care more

If you're swing trading — holding for days or weeks — a 1-pip spread is irrelevant. Your target might be 80 pips. The spread is 1.25% of your expected move.

But if you're a scalper targeting 5–8 pips per trade and taking twenty trades a day, you're paying 20 pips in spread cost before you see a single pip of profit. That's real money.

A Makati-based trader scalping USD/JPY at 1.5-pip spread, 0.10 lot size, twenty times a day, pays roughly ₱430 in spread per day — over ₱9,000 a month. And that's before any losing trades.

Typical spreads on major pairs

During the London session (3 PM to midnight Manila time), expect:

EUR/USD: 0.6–1.2 pips
GBP/USD: 1.0–2.0 pips
USD/JPY: 0.8–1.5 pips
AUD/USD: 1.0–1.8 pips

Exotic pairs (PHP/USD, for example, if it were widely traded) can have spreads of 20, 50, even 100 pips. They're expensive to enter and exit.

What this means for you

Spread is not optional. It's not negotiable. You pay it on every trade, win or lose.

If your edge is thin — and for most retail traders, it is — spread can be the thing that turns a break-even strategy into a losing one.