Spread
Spread — The gap between the bid and the ask — the cost you pay on entry, and the only major trading cost your statement does not record as a line.
Every position starts underwater by the spread. It is the most frequently paid cost in trading and the hardest to audit, because it never appears as its own number — it is baked into the price you were filled at, and a statement records only that price.
In plain English
Two prices exist at any moment: the bid, at which you can sell, and the ask, at which you can buy. Their difference is the spread. Buy at the ask and the position is immediately worth the bid, so you begin down by the spread before the market has done anything at all.
For a standard lot on EUR/USD, one pip of spread is about $10. That sounds trivial next to a $200 risk and stops being trivial at frequency: a hundred trades a month at 1 pip is $1,000, which for many accounts exceeds every other cost combined.
Spreads are not constant. They are tightest in liquid hours and widen — sometimes enormously — around news, at the daily rollover, at the weekly open, and on exotic pairs at any time. A strategy backtested at typical spreads and traded through announcements is being measured against a cost it does not actually pay.
The formula
Spread cost = spread in pips × pip value × lots Cost in R = spread cost ÷ risk in money
- Paid once per round trip, on entry. Exiting at the bid on a long is the same event viewed from the other end.
- On a raw-spread account the spread is small and commission is charged instead. On a standard account the spread carries the whole cost.
Cost in R is the number that matters. A 1-pip spread against a 10-pip stop is 10% of your risk, on every trade, forever. Against a 100-pip stop it is 1%.
Worked example — the demo account
The spread is not in the statement, so this is worked from stated inputs — and the point of the example is precisely that it cannot be worked from the file.
| One lot of EUR/USD, 1.0 pip spread | $10.00 | |
|---|---|---|
| Against a 50-pip stop ($500 risk) | 2.0% of risk | |
| Against a 10-pip stop ($100 risk) | 10.0% of risk | |
| 100 trades a month at 1 pip | $1,000 | |
| Compare: the demo account’s entire commission bill | −$329.04 |
On a tight-stop strategy the spread is routinely the largest single cost, and it is the one with no column in the file.
The 10% row is the one worth dwelling on. A strategy risking 10 pips pays a tenth of its risk to the spread on every trade — which means its break-even win rate is meaningfully higher than its reward-to-risk suggests, and the gap is invisible unless you put it there deliberately.
It is also why the demo account’s −$329.04 of commission understates its true cost of trading. Every one of those 96 trades also paid a spread, already inside its open price, and no analysis of the file can separate it out.
Every figure above is from the demo account TapeSheet ships with — 96 closed trades, generated from a fixed seed. Open the same account →
What this does not tell you
The caveat is the part worth reading. Most tools put it in a footer, if they print it at all.
- A statement cannot recover it. The open price you were filled at already includes it, and there is no record of what the mid-price was at that moment. Any tool claiming to compute your spread cost from a statement is estimating.
- The advertised spread is a typical, not a guarantee. "From 0.0 pips" describes the best moment on the most liquid pair, and the average you actually pay is a different number entirely.
- Nothing about slippage, which is a separate cost on top and is likewise invisible in the file.
- Widening is worst when you most need it not to be. Spreads blow out on news and at the rollover, which are exactly the moments stops get triggered — so the cost peaks precisely when the loss does.
Where TapeSheet shows it
Not shown, because it is not in the file and estimating it would be inventing a number. What TapeSheet does show is the cost that IS recorded — commission and swap, as their own tiles — and it says plainly on the costs panel that spread is missing and why.
Questions
Can TapeSheet work out what I paid in spread?
No, and no tool reading a statement can. The spread is inside your fill price and the file contains no reference price to compare it against. We say so rather than producing an estimate, because an invented cost figure would corrupt every downstream number while looking authoritative.
Is a zero-spread account free?
No. Zero or near-zero spread accounts charge commission instead, and the total is often similar. The comparison worth making is spread plus commission, expressed as a cost per R on your own typical trade — which is the only form in which the two structures are actually comparable.
Why did my spread jump to 20 pips?
Almost certainly a liquidity event: a scheduled announcement, the daily rollover, the Sunday open, or a holiday session. Spreads are set by available liquidity, and when market makers step back the gap widens. This is also when slippage is worst, which is why trading through announcements costs more than the strategy’s arithmetic accounts for.
Related terms
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