What the spread is
Every market has a bid (where you can sell) and an ask (where you can buy). The spread is the ask minus the bid. In forex it is quoted in pips. A market order buys at the ask, so the trade starts with a loss equal to the spread until the price moves.
Spread in dollars
Cost = spread in pips × pip value per lot × lots. Example (E): EUR/USD with a 0.8-pip spread and 0.20 lot (a pip is worth $10 a lot, so $2.00 a pip). The cost is 0.8 × $10 × 0.20 = $1.60. Some brokers charge a narrower spread plus a commission instead; add the commission to get the true cost. The pip value basics are in what is a pip.
The cost as a share of your risk
Because you size a position so a stop equals a fixed amount of risk, the spread as a share of that risk is simply spread ÷ stop, whatever the lot size. A tight stop makes the same spread much more expensive.
| Spread (pips) | 10-pip stop | 25-pip stop | 50-pip stop |
|---|---|---|---|
| 0.2 | 2.0% | 0.8% | 0.4% |
| 0.8 | 8.0% | 3.2% | 1.6% |
| 1.5 | 15.0% | 6.0% | 3.0% |
| 3 | 30.0% | 12.0% | 6.0% |
With a 0.8-pip spread, a 10-pip stop gives away 8% of the risk on entry, and a 50-pip stop 1.6%. Spreads differ by broker, pair and time of day (example values only, E).
How cost raises the win rate you need
With a 1:2 reward to risk and no cost you need to win one trade in three (33.3%). Add a total cost of one pip (spread plus commission) and the stop in R terms becomes 1 + c while the target shrinks to 2 − c, where c is the cost in R. The break-even win rate is (1 + c) ÷ 3, as in the table.
| Stop | Break-even win rate, no cost | Break-even win rate, 1 pip of cost |
|---|---|---|
| 10-pip stop | 33.3% | 36.7% |
| 25-pip stop | 33.3% | 34.7% |
| 50-pip stop | 33.3% | 34.0% |
Scalpers with tight stops feel this most. See what is a good risk to reward ratio for the underlying table and the risk to reward calculator to test your own numbers.
When spreads widen
Spreads are usually widest around scheduled news, at the daily rollover and when a market is thin. That is one more reason to check the economic calendar and the forex market hours before you trade. A stop can also be hit by a widened spread even if the chart price did not reach it.
Try it with your own numbers
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Pre-set for the market you trade
Pip, point and tick values differ by instrument. These calculators start from each one's contract, with worked examples:
Quick questions
What is a good spread?
There is no single figure. Compare it with your stop: a spread that is a few percent of the stop is easier to live with than one that is ten percent.
Do I pay the spread when I exit?
The spread is already in the price you get. You enter at the ask and a long position closes at the bid, so the round trip costs one spread.
Is a zero spread account free?
No. Such accounts usually charge a commission, so add it to find the real cost.
Why is the spread wider at night or on news?
Fewer dealers quote and prices can jump, so the gap widens. It usually narrows again when the market settles.
Wider, better-placed stops cost less per trade.
These indicators help you place stops at levels instead of at random distances.
Premium indicators come with a 7-day free trial on request: how the trial works.
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Last updated November 2026. For education only. Not financial advice.