{"id":61673,"date":"2026-09-03T17:03:49","date_gmt":"2026-09-03T09:03:49","guid":{"rendered":"https:\/\/www.vtmarkets.com\/en-ca\/uncategorized\/spread-definition\/"},"modified":"2026-09-03T17:03:49","modified_gmt":"2026-09-03T09:03:49","slug":"spread-definition","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.com\/en-ca\/trading-glossary\/spread-definition\/","title":{"rendered":"Spread Definition"},"content":{"rendered":"

What Is a Spread in Trading?<\/strong><\/h2>\n

Every time you open a trade \u2014 regardless of the market, platform, or instrument \u2014 there is a cost embedded before a single pip moves in your favour. That cost is the spread<\/strong> and understanding it is one of the most fundamental skills in manual trading.<\/p>\n

The spread<\/strong> is the difference between the bid price<\/strong> (the price at which the market will buy from you) and the ask price<\/strong> (the price at which the market will sell to you). It is the built-in margin your broker earns on every transaction \u2014 and it represents the first hurdle your trade must clear before it becomes profitable.<\/p>\n

If the bid price on GBP\/USD is 1.2700 and the ask is 1.2703, the spread is 3 pips. The moment you enter, you are already 3 pips in the red. The market must move 3 pips in your direction just to break even.<\/p>\n

Why the Spread Meaning Matters for Manual Traders<\/strong><\/h2>\n

For passive investors, the spread is a minor consideration. For manual traders \u2014 especially those on shorter timeframes \u2014 it is a critical variable that directly shapes profitability.<\/p>\n

It Is Your True Cost of Trading<\/strong><\/h3>\n

Commission-free trading does not mean cost-free trading. The spread is how brokers generate revenue, and it is factored into every position you open. The wider the spread, the more the market must move in your favour before you see a profit.<\/p>\n

It Varies by Market and Conditions<\/strong><\/h3>\n

Spreads are not fixed. They fluctuate based on liquidity, volatility, and time of day. Major forex pairs like EUR\/USD carry tight spreads due to high volume. Exotic pairs, low-cap equities, and illiquid commodities carry wider spreads \u2014 increasing the effective cost of every trade placed.<\/p>\n

It Compounds Across Multiple Trades<\/strong><\/h3>\n

For scalpers and high-frequency traders, the spread is a constant drag on performance. A 2-pip spread, multiplied across dozens of trades per session, represents a cumulative cost that quietly erodes profitability over time.<\/p>\n

Types of Spreads in Manual Trading<\/strong><\/h2>\n

Fixed spreads<\/strong> \u2014 Remain constant regardless of market conditions, useful for budgeting trade costs consistently.<\/p>\n

Variable spreads<\/strong> \u2014 Fluctuate in real time based on liquidity and volatility. Tighter during calm conditions and peak sessions \u2014 but can widen sharply around major news events.<\/p>\n

Commission-based spreads<\/strong> \u2014 Near-zero spreads with a separate commission per trade, often the most cost-effective structure for high-volume manual traders.<\/p>\n

How to Minimise the Impact of the Spread<\/strong><\/h2>\n