Trading glossary
Spread: meaning in trading
The spread is the gap between the buy (ask) and sell (bid) price: the built in cost of every trade.
Every forex quote has two prices. You buy at the higher one (the ask) and sell at the lower one (the bid). The difference is the spread, and it is paid the moment you enter.
On GBPUSD with a good broker the spread is often under one pip during London. It widens at the daily rollover around 22:00 UK time and around big news releases.
Why it matters for small stops
With a 10 pip stop, a 1 pip spread is a tenth of your risk. That is one reason to trade the busy London and New York hours, when spreads are tightest.
Learn more
Guide: The best time to trade GBPUSD
Related terms: Pip · Stop loss · London session