The spread is the gap between the buy price and the sell price. It is the first cost of every trade. Commission and swap are the other two.
What the spread is
Every pair has two prices:
- Bid: the price you sell at.
- Ask: the price you buy at.
If EUR/USD shows 1.0842 / 1.0843, the spread is 1 pip. The moment you buy, you are 1 pip in loss. The price must move 1 pip your way just to break even.
Spreads are not fixed. They widen in quiet hours and during news. They narrow when London and New York overlap.
| Pair | Typical spread | Cost per 0.10 lot |
|---|---|---|
EUR/USD | 0.8 to 1.5 pips | 0.80 to 1.50 dollars |
GBP/USD | 1 to 2 pips | 1 to 2 dollars |
XAU/USD | 0.20 to 0.40 dollars | 2 to 4 dollars |
These are common ranges, not a promise about any broker. Check your platform’s live quotes.
The shorter your trades, the more the spread matters. A 5-pip target pays 20 percent of itself in spread.
Commission
Some “raw” or “ECN” accounts have a spread near zero plus a fixed fee per lot. To compare, turn both into one number:
- Standard account: 1.2 pips on
EUR/USD, no commission. Cost per 1.00 lot: 12 dollars. - Raw account: 0.1 pip plus 7 dollars commission. Cost per 1.00 lot: 8 dollars.
The raw account is cheaper here, but not always. Compare at the hours you actually trade.
Swap
Swap is a small charge on trades held overnight. It comes from the interest rate difference between the two currencies, plus the broker’s markup. Most trades are charged, not credited. Wednesday night usually counts for three nights.
Swap-free accounts remove this charge. Many brokers replace it with a fixed fee after some days, a wider spread, or a time limit. Read the terms. Whether swap-free settles the halal question is something scholars discuss.
Example: the real cost of a trade
You buy 0.20 lot of GBP/USD. Spread is 1.5 pips. You hold it 4 nights at 0.90 dollars swap per 0.10 lot per night. You close 60 pips in profit.
- Gross profit: 60 pips × 2 dollars = 120 dollars.
- Spread: 1.5 × 2 = 3 dollars.
- Swap: 0.90 × 2 × 4 = 7.20 dollars.
- Net: 120 − 3 − 7.20 = 109.80 dollars.
Costs took about 8 percent of the gain. On a losing trade, they add to the loss.
Before you choose an account
- Spread on your pairs, at your hours.
- Commission per lot, open and close together.
- Swap per night, and what Wednesday costs.
- Swap-free terms: the fee, when it starts, what is excluded.
Swap is an interest payment, which is where the halal discussion starts. The guide on whether forex is halal explains it.
Questions, answered plainly.
What is the spread in forex?
The gap between the buy price and the sell price, which you pay the moment a trade opens.
Is a zero-spread account really free?
No, it charges a fixed commission per lot instead, so add both together to compare accounts.
What is swap in forex?
A small charge or credit on trades held overnight, based on the interest rate difference between the two currencies.