Spread: meaning in forex and gold trading
The spread is the difference between the bid and ask price, and it is the basic cost of opening a trade.
Last updated: · By Forexuro Desk · Editorial policy
Free on Telegram. Follow Forexuro on Telegram for daily gold and forex market updates, key levels and a heads up before big releases.
Free, opens TelegramDefinition
Spread: The spread is the difference between the bid and ask price, and it is the basic cost of opening a trade.
How the spread works
Every forex quote has two prices. The bid is the price you can sell at and the ask is the price you can buy at. The ask is higher, and the gap is the spread. If EUR/USD is 1.12150 / 1.12158, the spread is 0.8 pips. A new trade starts with a small loss equal to the spread, because you buy at the ask but would sell at the bid.
When spreads widen
Spreads are usually tightest when liquidity is high, for example during the London and New York overlap. They often widen around the daily rollover, in thin holiday markets and in the seconds around high impact releases such as non-farm payrolls or a Fed decision. A wide spread can trigger a stop that the chart price never reached, because sell stops are filled at the bid and buy stops at the ask.
Spread versus commission
Some accounts charge a wider spread and no commission; raw spread accounts charge a narrow spread plus a fixed commission per lot. Compare the total cost per round trip, not the headline spread.
Worked example
Gold is quoted 4,030.10 / 4,030.40. The spread is 0.30 dollars. On one lot of 100 ounces, that is 30 dollars of cost the moment the trade opens.
Common mistakes
- Placing stops so close that normal spread widening hits them.
- Ignoring commission when comparing accounts.
If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.
Related terms
Tools and guides
Frequently asked questions
What is a good spread on EUR/USD?
It varies by broker and time of day. Compare quotes at the times you actually trade.
Why did my stop trigger before price reached it?
Sell stops trigger on the bid and buy stops on the ask. If the spread widened, your stop may have been hit even though the chart line did not touch it.
Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.