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Forex Spread Cost: How to Calculate the Cost of a Trade

Every forex quote has two prices: the bid, where you can sell, and the ask, where you can buy. The gap between them is the spread — a cost you pay when you open a trade.

4 min read

All prices and rates below are illustrative examples, not live quotes.

Bid, ask and spread

If EUR/USD is quoted 1.08500 / 1.08512, you can sell at 1.08500 or buy at 1.08512. A trade bought and immediately sold would lose the difference.

Spread = Ask − Bid
Spread (pips) = Spread ÷ Pip size
Spread cost = Spread (pips) × Pip value per lot × Lots

Examples

Worked example

EUR/USD, 1 standard lot, USD account

  1. Spread = 1.08512 − 1.08500 = 0.00012 = 1.2 pips
  2. Pip value = $10 per lot
  3. Cost = 1.2 × 10 × 1 = $12

At 0.5 lots the cost would be $6.

Worked example

USD/JPY, 1 standard lot, USD account

  1. Quote 150.020 / 150.035 → spread 0.015 = 1.5 pips
  2. Cost in yen = 1.5 × 1,000 = 1,500 JPY
  3. At an example rate of 150.00: ≈ $10.00

Variable spreads

Many brokers use variable spreads that widen during low liquidity, around news releases and at market open. A spread that's 1 pip most of the day can be several pips at certain times. Some accounts charge tighter spreads plus a separate commission — estimate that with the Forex Commission Calculator.

Why spread cost matters

A trade starts at a loss equal to the spread. For short-term trades targeting a few pips, the spread can be a large share of the expected move. The Forex Break-Even Calculator shows how far price must move to cover spread and commission.

How the calculator works

  1. Open the Forex Spread Cost Calculator.
  2. Enter bid and ask (or the spread in pips) and choose the pair type.
  3. Enter lot size and any conversion rate requested.
  4. Press Calculate to see the spread in pips and its cost.

Run your own numbers

Work out what the bid/ask spread costs on a trade.

Open Forex Spread Cost Calculator

Related calculators

Forex Commission CalculatorAdd up commission per trade and across many trades.Open calculator Forex Break-Even CalculatorFind the price needed to cover spread and commission.Open calculator

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