What Is a Spread in Forex? | What Are Forex Signals?

The spread is the difference between the price at which you can buy a currency pair (the ask) and the price at which you can sell it (the bid). It is the main cost of most retail forex trades, and you pay it every time you open a position, whether the trade wins or loses.

How to read it

If EUR/USD is quoted at 1.0850 / 1.0852, the bid is 1.0850, the ask is 1.0852 and the spread is 2 pips. You buy at the higher price and sell at the lower one, so a new position starts out 2 pips in the red.

Quote	Bid	Ask	Spread
EUR/USD	1.0850	1.0852	2 pips
USD/JPY	149.98	150.01	3 pips

What it costs

The dollar cost is the spread in pips multiplied by the pip value for your position size:

EUR/USD, 2-pip spread, 1 standard lot: 2 × $10 = $20
Same spread, 0.1 lot: $2
USD/JPY, 3-pip spread, 1 standard lot at about 150: about $20

Some accounts quote a tighter raw spread and charge a separate commission per lot instead. To compare, add the two together.

Why spreads matter so much for signals

Because the spread is paid on every trade, it hits frequent, short-target strategies hardest. If a signal service targets 10 pips and stops out at 10 pips, a 1.2-pip spread means you need to win about 56% of trades just to break even, not 50%. Over hundreds of trades a year, spread costs at one standard lot can run to thousands of dollars. This is worked through in why most retail forex traders lose and in more depth in transaction costs in retail FX.

Signal providers often report results from their entry price to their exit price, before the spread. A follower always trades after it.

When spreads widen

Spreads are not fixed, even when a broker advertises a “typical” figure. They tend to widen:

around major data releases and central bank decisions;
at the daily rollover, around 5 pm New York time, when liquidity is thin;
at the Sunday evening open;
in less traded pairs and during market stress.

A wider spread can trigger a stop loss even if the mid-price never reaches it, because a long position’s stop is triggered by the bid.

Who earns the spread

The spread is revenue for whoever is quoting you the price. That might be an outside market maker, or your broker if it takes the other side of your trade. How brokers earn it is explained in forex broker conflicts of interest.