How the spread works in forex
The spread in forex is the difference between the buy and sell price of a pair, quoted in pips. It is the primary cost of trading on most accounts, charged the moment you open: you start every trade slightly underwater by the spread amount and need the price to move in your favour just to break even. Tighter spreads mean lower costs and a lower hurdle to profit.
Worked example
You open a EUR/USD position with a 0.8-pip spread on a standard lot. That is roughly $8 of cost the instant you enter. The price must rise 0.8 pips just to reach breakeven, then beyond it to profit. On a wider 3-pip spread the same trade starts about $30 down, which matters enormously if you trade often or aim for small moves.
Spread types on Volity
Spreads can be fixed or variable; Volity uses dynamic spreads that tighten toward a fraction of a pip on majors in deep liquidity and widen in thin conditions. The practical rule is to trade liquid instruments in active hours, when the spread is smallest, and to avoid opening into news, when it spikes. Spread is the cost you can most easily control.
Why it matters
The spread is the unavoidable entry cost on every forex trade, so over hundreds of trades it is often a bigger drag than any single loss. Minimise it by trading liquid pairs in peak hours. Related: bid-ask spread and pip.
Learn more in our forex trading guide.
