Markets & Assets
Spread
Definition
The difference between the bid (selling) and ask (buying) price of an instrument — the implicit cost of each trade.
How It Works
The spread is the cost you pay every time you enter a trade. For example, if EUR/USD has a bid of 1.1000 and an ask of 1.1002, the spread is 2 pips. You start every trade down by the spread amount.
Tighter spreads = lower costs. Prop firms use various brokers/liquidity providers with different spread models: some offer raw spreads + commission, others offer slightly wider spreads with no commission. For active traders and scalpers, spread costs significantly impact profitability.
Compare spreads when choosing between prop firms, especially for high-frequency strategies.
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