Spread

The spread is the difference between the buying price (ask) and the selling price (bid) of a currency pair. It represents the primary cost of entering a trade and is how most brokers earn revenue on retail forex transactions. Spreads vary by pair, broker, and market conditions. Majors like EUR/USD typically have tight spreads of 0.1 to 1.5 pips, while exotic pairs can see spreads of 20 to 100 pips or more.

Spreads can be fixed or variable. Fixed spreads stay the same regardless of market conditions, offering predictability but potentially wider average costs. Variable spreads (also called floating spreads) change with market liquidity and volatility. During London and New York session overlaps, variable spreads on majors can be fractions of a pip. During low-liquidity periods like the Asian session open or around major news releases, spreads widen significantly to reflect increased risk for liquidity providers.

For example, if EUR/USD has a 0.8 pip spread with bid 1.0849 and ask 1.08498, entering 1 standard lot costs about $8 just in spread. A profitable trade must first cover that cost before producing real gains. Over 100 trades, a consistent 0.8 pip spread costs $800. Trading a pair with 3 pip spread instead would cost $3,000 across the same 100 trades, which is why active traders prioritize brokers with tight pricing.

In copy trading, spread cost is a major factor in real-world performance versus backtested performance. SteadyFlowFX's verified Myfxbook 1.73 profit factor and 12 percent average monthly net return are calculated after real spreads on the master account. The strategy's 9 algorithms are designed to operate profitably through typical spread conditions. When choosing a broker to use with any copy trading service, prefer ECN or STP brokers with tight variable spreads, because lower costs directly improve your net returns compared to the published track record.