Spreads
The difference between the buy and sell prices quoted for an instrument.
Understand the real costs of trading before choosing a broker. Learn how spreads, commissions, swaps, financing charges and other fees affect your trading expenses.
Trading costs are the expenses associated with opening, maintaining and closing positions, as well as funding and operating a trading account. These expenses can reduce returns or increase losses.
Different brokers use different pricing structures. Some primarily charge through spreads, while others combine narrower spreads with separate commissions. Depending on the product and account type, traders may also pay financing charges, exchange fees, data fees or account-related charges.
The advertised spread or commission is therefore only one part of the picture. A meaningful comparison should consider the total cost relevant to your trading activity.
The fees you encounter depend on the broker, account, financial instrument and trading strategy.
The difference between the buy and sell prices quoted for an instrument.
A separate fee charged per trade, per side, per lot or as a percentage of transaction value.
Charges or credits associated with holding certain leveraged positions overnight.
Charges that may apply when adding or removing funds from an account.
Fees or exchange-rate markups when transactions involve different currencies.
Potential inactivity charges, market data subscriptions, platform fees and other service-related costs.
A spread is the difference between the bid price, at which you can sell, and the ask price, at which you can buy.
For many forex pairs, spreads are expressed in pips. For other instruments, they may be expressed in points, ticks or price units.
| Quote | Price |
|---|---|
| Bid | 1.10000 |
| Ask | 1.10012 |
| Difference | 0.00012 = 1.2 pips |
Hypothetical example for educational purposes. EUR/USD commonly uses 0.0001 as one pip.
Spreads may widen during low-liquidity periods, important economic announcements, market openings, periods of volatility and other unusual conditions.
Research tip: Compare typical or observed spreads during the hours you expect to trade, not just a broker's advertised minimum spread. Minimum spreads may not be representative.
Spread cost also depends on position size and the value of each pip or point. A wider spread can be more expensive for larger positions, although the exact monetary cost varies by instrument.
Some brokers charge a separate commission when a trade is executed. The commission structure may depend on the account type, trading volume, asset class and platform.
A broker may include its trading charge within the quoted spread rather than charging a separate dealing commission.
This does not mean the trade is free. The spread remains a transaction cost.
Another account may offer narrower spreads but charge a separate commission for opening and closing trades.
The two components should be added together when comparing costs.
Assume a hypothetical forex account charges $3.50 per standard lot per side.
The round-turn commission is $7 for one standard lot, excluding spread, financing and any other applicable costs.
Important: Always verify whether a quoted commission is per side or round turn, and whether it applies per lot, per order or as a percentage of trade value.
Traders who hold leveraged forex or CFD positions overnight may incur financing charges or, in some circumstances, receive financing credits.
The amount can depend on the instrument, direction of the position, interest-rate environment, broker markup and holding period.
Overnight adjustments that can reflect interest-rate differences, broker pricing and the position's direction.
Financing adjustments for certain leveraged CFDs, often calculated using a benchmark rate and broker markup.
Some instruments apply multi-day financing adjustments on specified weekdays to account for settlement conventions or non-trading days.
Important: Financing methods vary. A swap-free or Islamic account may use alternative administrative fees or eligibility rules. Do not assume it has no holding costs.
If you frequently hold positions overnight, financing can become a significant part of your total trading expenses.
A broker's overall cost is not limited to opening and closing trades.
| Fee Type | What It Means | What to Verify |
|---|---|---|
| Deposit Fees | Charges for funding an account. | Payment method, provider fees and currency. |
| Withdrawal Fees | Charges for transferring money out. | Minimums, frequency, method and processing fees. |
| Currency Conversion | Charges or exchange-rate markups when currencies differ. | Conversion rate, markup and settlement currency. |
| Inactivity Fees | Charges after an account remains unused. | Inactivity period, amount and applicable conditions. |
| Market Data Fees | Charges for certain live exchange data or subscriptions. | Required exchanges, subscription tiers and exemptions. |
| Platform Fees | Charges for certain trading software or premium services. | Monthly costs, minimum activity and included features. |
| Guaranteed Stop Fees | Potential premiums for guaranteed stop-loss features. | Eligibility, premiums and refund conditions. |
Payment intermediaries and banks may charge fees independently of the broker. A broker advertising free withdrawals does not necessarily mean the entire transfer is free.
Trading expenses are also influenced by the prices at which orders actually execute. This matters especially during volatile or fast-moving market conditions.
Slippage is the difference between an expected execution price and the price at which an order is filled. It may be favourable or unfavourable.
Execution speed, available liquidity, order type, market conditions and broker execution policies can all affect outcomes.
A broker with low advertised commissions is not automatically the lowest-cost choice if execution outcomes are consistently less favourable.
Review the broker's execution policy, order types and available execution statistics where provided. Remember that past execution outcomes do not guarantee future results.
These simplified examples illustrate how different charges can add up. They are not quotes from real brokers.
Assume a EUR/USD trade of 100,000 EUR with a spread of 1.2 pips. For this standard-lot EUR/USD example, with the account denominated in USD, one pip is approximately $10.
The estimated spread cost is $12, assuming the spread and position size remain as specified. This excludes financing, slippage and other charges.
Assume the same EUR/USD position, a spread of 0.2 pips and a commission of $3.50 per side per standard lot.
Under these simplified assumptions, the second pricing structure costs $9 compared with $12 in Example 1. Real trading conditions may differ.
Suppose a hypothetical position incurs a financing charge of $4 per day and is held across five chargeable days.
The financing expense is $20, in addition to spread, commission and any other applicable costs.
This example assumes an unchanged daily charge and no special rollover adjustments. Actual financing schedules and calculations vary.
General comparison formula: Total trading expense may include spread cost + commissions + net financing charges + applicable execution-related costs + other relevant fees. Financing credits or favourable execution may offset some expenses.
A fair comparison should use the same instrument, comparable trade size, similar trading hours and an appropriate account type.
| Comparison Factor | Why It Matters |
|---|---|
| Account Type | Standard, raw-spread and professional accounts may use different pricing. |
| Typical Spreads | Actual spreads can differ significantly from advertised minimums. |
| Round-Turn Commission | Allows commissions to be compared consistently. |
| Trade Size | Fees and pip values can change with position size. |
| Holding Period | Overnight charges can materially affect longer-held positions. |
| Execution Quality | Slippage and fills can affect realised costs. |
| Funding & Conversion | Payment and currency charges may add to overall account expenses. |
| Jurisdiction | Broker entities and pricing may differ by country and regulatory framework. |
When evaluating two brokers, record their costs for the same trade scenario. For example, compare one standard lot of EUR/USD during the same trading session under the account conditions available to you.
If you trade stocks, ETFs, futures, options or cryptocurrencies, use the relevant product-specific fee schedule rather than assuming forex pricing rules apply.
Explore Broker Comparisons →Use this checklist when researching a broker's pricing and account terms.
Remember: Low costs are only one consideration. Regulation, product suitability, risk controls, financial stability, service quality and withdrawal procedures also matter.
The spread is the difference between the quoted bid and ask prices. A commission is a separate fee charged by the broker for executing or processing a trade. Some accounts charge both.
Not necessarily. A broker may earn revenue through spreads, financing, currency conversion or other charges. Always examine the full fee schedule.
A pip is a standard unit used to describe price movements in forex. For many currency pairs, one pip is 0.0001. For many JPY-quoted pairs, it is 0.01.
No. Depending on the instrument, position direction, broker and account conditions, overnight adjustments may be charges or credits. Some accounts use alternative financing arrangements.
No. Withdrawal policies differ. Even when a broker does not charge a fee, banks or payment providers may apply their own charges.
Lower spreads can reduce one part of trading expenses, but commissions, execution quality, financing and other fees should also be considered.
They can. Broker legal entities, account offerings, regulatory requirements, available products and pricing may vary by jurisdiction.
Review the broker's official pricing pages, account specifications, product schedules and legal documents. Contact the broker if a fee is unclear, and verify the terms that apply to your legal entity.
Trading costs are one part of evaluating a broker. Explore our other research hubs for a broader understanding.
Understand forex and CFD markets, leverage, instruments and risks.
Explore Forex & CFDs →Learn how to verify licences, broker entities and regulatory status.
Explore Regulation →Compare broker features, account conditions and other relevant considerations.
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Explore Research →Educational information: This guide is provided for general educational and research purposes only. It is not personalised financial, investment or trading advice.
Risk warning: Trading and investing involve risk. Leveraged forex and CFD products can result in substantial losses. Fees, spreads, commissions and financing charges can change. Always review current provider terms.
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