"Pay the Spread"?

For the record, I have an account with GFT and Im using the DealBook 360 software.

When I asked someone about all the fees involved with using GFT and their software, I was told there is basically one fee involved - the spread fee. What is the spread fee? How is it calculated? When do I have to pay it?

The “Spread” is the difference between the bid and ask price when trading currency pairs and it is paid when you push the trigger to enter a trade, Now one of the aims of this forex game is to try and trade currency pairs with low spread sizes, You dont want to trade a currency that has a 12pip spread, if you do, you will have to wait for price to move 12 pips in your favour until you break even and start making profit. Most traders focus on EUR/USD which has a 2 to 3 pip spread depending on the broker you trade though.

Now on a mini account trading the eur/usd, the value of one pip is $1 if you buy/sell 1 mini Lot, SO, The cost of the eur/usd is 3$ if the spread is 3pips

Hope this helps, I am new with this forex stuff too and its freaking cool !!!


Yes, that does help explain it, thank you very much.

However (LOL), Im still having a hard time coming up with a rough estimate as to how much that can be. I mean I truly, truly have no clue how much the spread fee can cost me. Lets say I have $10,000 ready. Is it possible to give me a ultra-rough-somewhere-in-the-ballpark range of what I can expect?? $100? $500? $2500? I am utterly clueless.

Hey T

I just edited my previous post with an example


The value of the spread is based primarily on two things. One is the size of your position and the other is the size of the spread. And of course the currency pair plays into it in terms of pip values.

Here’s an example.

If you trade a 10,000 unit GBP/USD position your pip value is $1. If the bid/ask spread is 2 pips, the spread value is $2.

Thanks everyone for your replies!

I still dont get it, LOL, but I was just introduced to the Forex Market a week ago, so I have lots to learn.

The spread is always represented in pips. So, let’s say you are trading EUR/USD, which has a 3pip spread. What this will cost you in pure dollar terms depends on the type of account you are trading and your contract size.

In a standard account, the value of a single pip in the EUR/USD is $10. So a 3pip spread will cost you $30 for the trade, assuming you trade 1 contract. It is a one time cost and you will not be charged another spread when you liquidate the trade.

If on the other hand you are trading a single contract in a mini account, a single pip will be worth $1. So a 3 pip spread will cost you $3. If you trade 2 contracts, the spread is still 3 pips but will now cost you $6.

You really have to look at it on a per trade basis. This is how spreads are quoted.

If you just go through the school of pipsology on this web site, i’m sure things will start to become clearer

Well thanks again everyone for your replies. I think I need to do some more studying first then come back later and ask this question, as most of your replies just dont make much sense to me (which is completely my fault, not any of yours).


In the babypips school, it explains what the “spread” is for forex trading. Realize that this is how the brokers make their money off of your trade. Here is the link so you don’t need to go searching…:slight_smile:

How You Make Money Trading Forex - Pre-School: Forex Basics - Beginner’s Guide to Forex Trading, Free Forex Education, Learn to Trade Forex, Forex Training - BabyPips.com

Welcome to the world of forex trading and babypips.com!

I sure hope you’re not trading a live account with real money.

No offence, but the spread is a basic Forex term and, if you don’t understand what it is, you’re better off just burning your money in the fireplace. It’s less painful. :slight_smile:

Since you were only introduced to Forex a week ago, I would suggest taking the Babypips “school”, as others have also said. It’s great and gives you a good understanding of Forex.

Then, trade a demo account just to see how things work, including how the spread will affect your profit and loss.

[B]Only after doing all that[/B], and you have tested a system that you’re comfortable with and is consistently profitable, should you be trading real money in a live account.

Don’t get sucked into following most of the newbies you’ll meet in other forums. The vast majority have no clue what they’re doing and will be bankrupt very quickly.

Babypips is quite different than most of the other forums. You’ll find knowledgeable and helpful people here, not a lot of BS from uninformed wannabe traders.