Spread in Forex: What It Is, Plus Commission and Swap
The spread in forex is the gap between the buy (ask) price and the sell (bid) price, and you pay it the moment you open a trade. On 0.10 lot of EURUSD, a 2-pip spread costs $2, and commission and overnight swap can add to that.
Module 2 · Lesson 5 of 5
What you'll learn
- What the spread in forex is and why every trade starts slightly negative.
- How to turn a spread in pips into a cost in money.
- What makes spreads wider or narrower, and how fixed and variable spreads differ.
- How commission and swap add to the cost of a trade.
- Where to find the real figures for your own account in MetaTrader 5.
What is the spread in forex?
The spread in forex is the difference between the ask price, where you buy a currency pair, and the bid price, where you sell it. It is measured in pips and is the main cost of most forex trades. You pay it the moment you open a position, so every new trade starts slightly negative.
If EURUSD is quoted 1.10000 bid and 1.10020 ask, the spread is 1.10020 − 1.10000 = 0.00020, or 2 pips.
If you buy at 1.10020 and the price does not move, you can only sell back at 1.10000, so the trade shows a small loss straight away. The bid and ask price page shows which side your stop loss is checked against. The market has to move by the spread in your favour before the position breaks even. A short position works the same way in reverse: you sell at the bid and must buy back at the ask.
Think of changing money at an airport. The board shows one rate to buy and a worse one to sell. You pay that gap just by making the exchange, before the rate has moved at all.
A pip is a standard unit of price change, and how much a pip is worth in money depends on the instrument and position size. If pips are new to you, start with the lots, pips and pip value lesson in the CFDs Explained module.
What are the bid and ask prices?
The bid price is the price you can sell at and the ask price is the price you can buy at; the ask is always the higher of the two, and the gap between them is the spread. In MetaTrader 5, buy orders fill at the ask and sell orders at the bid, as its trading help states.
Ask price meaning in one line: what the market is asking you to pay. Bid: what the market will pay you. In Market Watch the two columns are labelled Bid and Ask, and charts are drawn from the bid. The bid and ask price glossary page covers which side triggers a stop loss.
How do you calculate the spread in forex?
To calculate the spread in forex, subtract the bid price from the ask price and count the gap in pips. To turn it into money, multiply the spread in pips by the pip value per lot and by the number of lots you trade.
- Spread in pips = (ask − bid) ÷ pip size. The pip size is 0.0001 for most pairs and 0.01 for pairs quoted in Japanese yen, such as USDJPY.
- Spread cost = spread in pips × pip value per lot × lots traded.
For a pair quoted in US dollars, such as EURUSD, one standard lot is worth about $10 per pip, so 0.10 lot is worth about $1 per pip. With a spread of 2 pips:
| Position size | Pip value | Spread | Spread cost |
|---|---|---|---|
| 1.00 lot | $10 | 2 pips | $20.00 |
| 0.10 lot | $1 | 2 pips | $2.00 |
| 0.01 lot | $0.10 | 2 pips | $0.20 |
The pip value calculator works out the pip value for other pairs and position sizes.
The spread cost grows with position size, not with the margin you put down. That is why the leverage and margin lesson matters here too: a larger position opened with the same deposit pays a larger spread.
If your account is held in another currency, MT5 converts each cost, such as the $2.00 spread on 0.10 lot, into your account currency at the live rate.
Here is what that 2-pip spread does to a trade of 0.10 lot:
- The price moves 10 pips your way: $10 gained, less the $2 spread, is $8 net.
- The price moves 10 pips against you: $10 lost, plus the $2 spread, is a $12 net loss.
Costs make every win a little smaller and every loss a little larger. Change the inputs below to see how the spread, commission and swap on your own trade change the result of the same win and the same loss.
What is commission in forex trading?
Commission in forex is a separate fee, charged per lot traded, that some accounts add on top of the spread. Accounts that charge commission often quote a narrower spread, while commission-free accounts usually build their charge into a wider spread. The fair comparison is the total cost of the same trade.
Commission is stated per lot, either for each side of the trade or for the round turn (opening and closing together). The European Securities and Markets Authority (ESMA) notes in its 2013 note on CFDs that some providers charge a commission on each trade, while costs can also include spreads, overnight financing and account fees.
To compare two accounts, add up the total cost of the same trade on each. With example figures for 0.10 lot of EURUSD:
| Spread-only account (example) | Commission account (example) | |
|---|---|---|
| Spread | 2.0 pips = $2.00 | 0.3 pips = $0.30 |
| Commission, round turn | none | $7 per lot × 0.10 = $0.70 |
| Total cost to open and close | $2.00 | $1.00 |
Which type costs less depends on the real spread and commission on your account and on how often you trade, so run this same comparison with your own figures.
What is swap in forex?
Swap in forex is the overnight financing charge or credit applied to a position that is still open at the platform's daily rollover. It reflects the interest rates of the two currencies in the pair plus the provider's own charge. It can be charged or, less often, paid.
Swap long and swap short are set separately, so the same pair can carry a different swap for a buy and a sell, and both can be negative. A position opened and closed before the rollover pays no swap. A position held for weeks pays it every night. Because swap is tied to interest rates, it is the cost at the centre of the question is forex trading halal, which also explains swap-free accounts.
Overnight funding fees vary considerably from firm to firm and across instruments, as the UK Financial Conduct Authority (FCA) found in its October 2026 review of CFD firms, so the swap figures in your own symbol specification are the ones to use.
What is the triple swap day?
The triple swap day is the weekday whose rollover carries three days of swap, to cover the weekend when markets are closed. MetaTrader 5 sets a swap multiplier for each weekday, and its help page on symbol specifications uses a multiplier of 3 on Wednesday as its example. The day is set per symbol, so read it from your own specification.
Example, using a swap of −$0.80 per night on 0.10 lot of EURUSD where the triple day is Wednesday. You open on Monday and close on Thursday, so the position rolls over on Monday, Tuesday and Wednesday nights:
- Monday and Tuesday: 2 × −$0.80 = −$1.60.
- Wednesday, triple swap: 3 × −$0.80 = −$2.40.
- Total swap: −$4.00. With the $2.00 spread, the trade costs $6.00 before any price move.
In another account currency, the $6.00 is converted at the live rate, so the local figure changes whenever that rate moves. The longer a position stays open, the more swap matters compared with the one-off spread. How traders use the interest difference between currencies on purpose is covered in Module 13, in the lesson on the carry trade.
What affects the spread in forex?
The spread in forex mainly depends on liquidity, meaning how much buying and selling is happening in that instrument at that moment. Heavily traded major pairs such as EURUSD usually have narrower spreads in busy hours. Less-traded pairs, quiet hours and major news releases tend to bring wider spreads.
Common times for wider spreads include:
- Around the daily rollover, when liquidity is thin. This is the main reason spreads often look wider late at night.
- Around major economic news releases, when prices move fast.
- On less-traded minor and exotic pairs.
- Outside an instrument's main trading hours and when markets reopen after the weekend. ESMA notes that when a provider lets you trade while the underlying market is closed, the spread can often be wider than when it is open.
A wider spread at the moment you open or close means a higher cost. It can also trigger orders: a stop-loss on a short position closes at the ask, so a widening spread can hit it even when the bid price shown on the chart never reaches that level.
What is the difference between fixed and variable spreads?
A fixed spread stays the same size in normal market conditions, while a variable (floating) spread changes with liquidity through the day. With a variable spread, the cost of the same trade depends on the moment you open and close it: often narrower in busy hours, wider around news and the rollover.
| Fixed spread | Variable (floating) spread | |
|---|---|---|
| Size | Set by the provider | Moves with market liquidity |
| Busy hours | As quoted | Often narrower |
| News and rollover | As quoted, unless your account terms say otherwise | Often wider |
| Cost known before you trade | Yes, for the spread part | Only at the moment you trade |
| MT5 symbol specification | Spread shown in points | Spread shown as floating |
Which type suits you depends on when you trade: your account terms say when a fixed spread can change, and a variable spread is best judged at the times you actually trade.
Why do trading costs matter to your results?
Trading costs matter because they are certain while price moves are not. Spread and commission come off every trade, and swap comes off every night a position is held. A strategy that looks profitable on a chart has to stay profitable after spread, commission and swap are counted, especially if you trade often or hold positions for a long time.
ESMA notes that these costs can be complex to calculate and can outweigh the gross profit from a trade, which is why skilled traders put them into every trade plan. Spreads widen during news and thin markets, and a negative swap adds to the cost for as long as a position stays open.
How do you check the spread and swap in MetaTrader 5?
To check the spread in MetaTrader 5, right-click Market Watch and switch on the Spread column, which shows the live spread in points. For swap, right-click a symbol, open Specification, and read swap long, swap short and the swap multiplier for each weekday.
On a five-digit pair such as EURUSD, 10 points equal 1 pip. On a demo account, compare a major pair with a less-traded one, and check whether the specification lists the spread as floating. Use those live figures in your own cost calculations.
Quick check
- The spread is the gap between
- When do you pay the spread?
- You trade 0.10 lot at $1 per pip and the spread is 3 pips. The spread costs you
- Swap applies when you
- A 10-pip move goes against you on a trade that cost $2 to open. Your net loss is
Frequently asked questions
What is a good spread in forex?
A good spread is a narrow one for the instrument and the time you trade. Major pairs such as EURUSD usually carry the narrowest spreads in busy hours, while less-traded pairs and the hours around news and the daily rollover carry wider ones. Market Watch shows the live spread on your own account. Spread is one of the factors in how to compare forex pairs.
Is a lower spread always better?
Not on its own. A lower spread reduces what you pay to open a trade, but the total cost also includes any commission and, for positions held overnight, swap. Compare the total cost of the same trade on each account.
Is a zero spread account free?
No. An account with zero or near-zero spreads usually charges a commission per lot instead, and swap still applies to positions held past the daily rollover. Compare the total cost of the same trade, spread plus commission plus swap, on each account type.
Why is my trade negative as soon as I open it?
Because you buy at the ask and could only sell straight back at the bid. The difference is the spread, so a new position starts down by the spread cost and needs the price to move by that amount just to break even.
Can swap be positive?
Yes, but less often than it is negative. Swap reflects the interest rates of the two currencies plus the provider's charge, so on some pairs one direction can earn a small amount each night while the other pays. Both directions can also be negative. Your symbol specification shows the current figures.
Sources
- European Securities and Markets Authority (ESMA), Investor warning: Contracts for difference (CFDs), 28 February 2013: costs of CFDs include commissions charged per trade or generally, bid-offer spreads, daily and overnight financing costs, account fees and taxes, and these costs can be complex to calculate and may outweigh the gross profits from a trade; when trading while the underlying market is closed, the spread can be wider than when it is open. https://www.esma.europa.eu/sites/default/files/library/2015/11/2013-267.pdf
- Financial Conduct Authority (FCA), Contracts for difference firms: good and poor practice, 15 October 2026: overnight funding fees vary considerably from firm to firm and across instruments, and the mark-ups inside them are still largely opaque. https://www.fca.org.uk/publications/good-and-poor-practice/contracts-difference-firms
- MetaQuotes, MetaTrader 5 Help: Market Watch, accessed 19 October 2026: the symbol specification shows the spread in points, marked floating when the spread is floating, plus swap long, swap short and a swap multiplier for each weekday (the example triples swap on Wednesday). https://www.metatrader5.com/en/terminal/help/trading/market_watch
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