# Bid, Ask, and Spread - Forex Pricing Basics

> The bid-ask spread is an immediate cost on every forex trade. Here is how it works, what affects it, and how to account for it in your analysis.

**Tags:** bid, ask, spread, forex-basics, trading-costs
**URL:** https://traderjournal.app/forex-basics/bid-ask-and-spread-forex-pricing-basics

---


# Bid, Ask, and Spread - Forex Pricing Basics

Every forex price you see in MetaTrader is actually two prices: the bid and the ask. The difference between them is the spread, and it is the primary cost of trading in most retail forex accounts.

---

## The Bid Price

The bid is the price at which your broker will buy the base currency from you - the price you receive when you sell.

When you want to sell EUR/USD, you sell at the bid price. This is always the lower of the two prices shown.

---

## The Ask Price

The ask (also called the offer) is the price at which your broker will sell the base currency to you - the price you pay when you buy.

When you want to buy EUR/USD, you buy at the ask price. This is always the higher of the two prices shown.

---

## The Spread

The spread is the difference between ask and bid, expressed in pips.

If EUR/USD bid = 1.08490 and ask = 1.08510:
Spread = 1.08510 - 1.08490 = 0.00020 = 2 pips

Every time you open a buy position, you immediately start 2 pips in the red because you bought at the ask and could only immediately sell at the bid (2 pips lower). The market must move at least 2 pips in your favor before you reach breakeven.

---

## How Spreads Vary

**By broker type:**
ECN/Raw spread brokers offer tight spreads (often 0.1-0.5 pips on EUR/USD) with an explicit commission per lot. Market maker and standard accounts build their fee into a wider spread (often 1-3 pips) with no explicit commission.

**By instrument:**
Major pairs (EUR/USD, GBP/USD) have tighter spreads than crosses and exotics. EUR/USD is typically 0.1-1.5 pips at most brokers. Exotic pairs can have spreads of 10-50 pips.

**By time of day:**
Spreads widen significantly during low-liquidity periods (late New York session, Asian session on European pairs) and during high-impact news events. The spread on EUR/USD might be 0.5 pips during the London session and 2-3 pips during an NFP release.

---

## Spread Impact on Your Strategy

For short-duration trades and scalpers, the spread is a significant percentage of potential profit. A 5-pip scalp target on a pair with a 1.5-pip spread means your gross profit on a winning trade is only 3.5 pips - a 30% immediate cost.

For swing traders holding positions for 50+ pips over multiple days, a 1.5-pip spread represents less than 3% of the target distance. The impact is much smaller proportionally.

---

Trader Journal tracks your net P&L including spread costs automatically through the EA sync. You can compare gross profit to net profit per trade to quantify your spread cost over time.

Download at android.traderjournal.app or ios.traderjournal.app.