Two prices, not one
When you look at a market on a trading platform, you will almost always see two prices, not one. There is the price you can buy at (often called the "ask" or "offer") and the slightly lower price you can sell at (often called the "bid"). The gap between these two numbers is the spread.
This surprises many beginners, who assume a market has a single price like a shop shelf. In reality, you buy at a slightly higher price and sell at a slightly lower one — and that small difference is one of the main ways your broker gets paid. It is a real, unavoidable cost that applies to essentially every trade you make.
The spread is a cost you pay on every trade
Because you buy high and sell low by the width of the spread, every trade starts life at a small loss. The moment you open a position, you are already down by the spread, and the market has to move at least that far in your favour before you break even.
Think of it like currency exchange at an airport. The board shows one rate to buy euros and a worse rate to sell them back. If you changed money and immediately changed it back, you would come out with less — not because the market moved, but because of the spread. Trading works the same way, and understanding this stops you from expecting to break even the instant you enter a trade.
How spreads are measured
Spreads are usually quoted in pips. If EUR/USD shows a buy price of 1.10512 and a sell price of 1.10502, the spread is one pip. A broker advertising a "0.8 pip spread" is telling you the typical gap you will pay on that market.
To turn a spread into money, you multiply it by your pip value. On a mini lot of EUR/USD, where each pip is worth about $1, a one-pip spread costs you about $1 to enter and exit a trade. On a standard lot, where each pip is worth about $10, that same one-pip spread costs about $10. So the money cost of the spread scales with your position size, just like everything else.
Why spreads change
Spreads are not fixed in stone. On heavily traded markets during busy hours — such as major currency pairs when London and New York are both open — spreads tend to be tightest, because there are plenty of buyers and sellers. On thinly traded markets, or in the quiet hours of the night, spreads widen because there is less activity.
Spreads also widen sharply around major news announcements and at moments of stress, sometimes dramatically for a few seconds or minutes. A spread that is normally 1 pip might briefly balloon to many pips. This is one reason experienced traders are cautious about trading through big scheduled news events: your cost of entry can spike at exactly the wrong moment.
Spreads, commissions, and the honest total cost
Some accounts advertise very low or "raw" spreads but then charge a separate commission per trade. Others fold everything into a slightly wider spread with no separate commission. Neither is automatically cheaper — you have to add the two together to see your real cost. A "zero commission" account with a wide spread can easily cost more than a small-commission account with a tight spread.
For a beginner, the practical takeaway is this: costs are real and they happen on every single trade, whether you win or lose. The more often you trade, the more the spread quietly drains your account. This is a big part of why trading small and infrequently tends to be far kinder to a beginner's balance than trading constantly — every trade you skip is a spread you did not pay.