In plain English
What Bid–ask spread means
A currency pair normally has a lower price for selling and a higher price for buying. Subtract the bid from the ask to find the spread. A narrower spread means the two prices are closer together; it does not by itself establish total trading cost, because commissions, financing, slippage, and other charges may also apply.
Why it matters
The spread affects the break-even movement required after entering a trade. It can widen when liquidity falls or uncertainty rises, including around major economic releases and outside active trading sessions. Comparing spreads must be done on like terms: the same pair, account type, time, order size, and any separate commission.
Example
If EUR/USD shows a bid of 1.08420 and an ask of 1.08435, the spread is 0.00015. Since one standard EUR/USD pip is 0.0001, this is a 1.5-pip spread. A buyer starts at 1.08435 but could initially sell only at 1.08420, before other costs.
Quick answers
Common questions
How do I calculate a forex spread?+
Subtract the bid from the ask, then convert the difference into pips using the pair’s pip convention. For EUR/USD, 1.08435 minus 1.08420 equals 0.00015, or 1.5 pips.
Can the bid–ask spread be negative?+
For a normal executable two-way quote in one instrument, the best ask should not be below the best bid. Different venues, timestamps, or data feeds can create apparent anomalies that are not directly tradable.
Sources