A spread is the gap between the two sides of a quote. On a typical forex or CFD screen that is the difference between bid and ask. It is not a high-street commission, and it is not always a fee on a separate line. It is built into the price.
That is why many beginners miss it. The platform can show a round-looking entry while the cost has already been paid in the quote.
What a Spread Actually Is
If GBP/USD is quoted 1.2700 bid and 1.2701 ask, the spread is one pip. A long position transacts at the higher figure. A short position transacts at the lower one. At the moment the position opens, the quote is already against you by that gap.
The same idea appears on a FTSE 100 CFD. A two-point spread on the index is a cost, whether or not anyone labelled it as one. Price has to move in your favour by at least that amount before the position is, in round terms, level.
Spreads exist because someone is making a market. In liquid hours they can be tight. In thin hours they can widen without any change in your idea.
How Spreads Show Up in Sterling
A spread only becomes a cost you can feel once it is multiplied by size. One pip on a micro lot of GBP/USD may be pocket change. One pip on a standard lot is a different number.
UK traders often notice this first on cable during London, when the quoted spread looks small, and then around a UK data print at 07:00, when the same pair can jump. The pair has not become a different product. Liquidity has.
Overnight, or around a Bank of England decision, the cost of getting in and out can be several times the midday figure. Counting only an advertised “from 0.6 pips” is like quoting a train fare without mentioning peak time.
When Spreads Widen
Spreads are often tightest when London is open and overlapping with New York. They tend to widen when the UK is asleep, around major news, and on pairs that fewer people trade.
A few patterns are useful to recognise:
- Major pairs such as GBP/USD are usually cheaper to transact than an exotic sterling cross
- The minutes around a CPI release or a BoE vote can be expensive even if the rest of the day is not
- Holding through the broker’s rollover is a separate overnight cost, not the spread itself
- A screenshot at 10:00 London is not a comparison of what you will pay at 22:00
None of that makes a tight spread a reason to click more often. Activity multiplies the cost.
If you are not sure whether you are counting the spread in your results, a free traders assessment can help you review how you currently treat costs before you treat a net figure as skill.
Why the Headline Number Misleads
Marketing tends to show the best spread in the best hour on the most liquid pair. Your actual cost is the spread at the moment you transact, on the instrument you use, at the size you take.
A beginner who transacts GBP/USD ten times in a morning can pay more in spreads than someone who takes one considered position on the same pair. The advertised number did not change. The behaviour did.
Slippage sits next to the spread. In a fast London open the fill can be worse than the quote you saw. That extra distance is also a cost.
Costs Belong in the Plan
A planned 20-pip target on a pair with a 1.5-pip spread is not a 20-pip idea. It is closer to 18.5 once you are in, before any further slippage. That is why some traders measure targets and invalidation from the actual fill, not from the mid price on a chart.
For teaching that treats costs as part of risk rather than as small print, Samuel and Co Trading offers structured courses for people who want the full ticket, not only the entry.
If you want to check how you currently account for spreads and size, take a free traders assessment and use the result as a study prompt.
Conclusion
A spread is the built-in gap between the two sides of a quote. It is the cost most beginners miss because it does not always appear as a separate fee.
The useful habit is to translate that gap into pounds at your size, notice when it widens, and include it in the distance a trade needs to travel. A cheap-looking quote is not a cheap education if the hours and the frequency undo it.
