Beginners

What Spread Is in Trading and Why It Eats Part of Your Profit

Astron Team · 09/24/2026 · 4 min read

Every asset traded on an exchange or over the counter has two prices at the same time: the price someone is willing to buy at (bid) and the price someone is willing to sell at (ask or offer). The difference between the two is called the spread, and it's the first cost — usually invisible to beginners — that any trade carries even before the market moves in its favor.

Understanding the spread changes how you assess whether a trade is worth it, especially on less liquid assets or in very short-term trades, where this cost weighs proportionally more.

How the spread shows up in practice

Imagine the EUR/USD pair quoted like this: buy (bid) at 1.0850 and sell (ask) at 1.0852. That means, if you want to buy euros now, you pay 1.0852 dollars per euro; if you want to sell, you receive only 1.0850. The spread here is 0.0002, or 2 pips. When opening a position, you already start with that gap against you: to break even, the price needs to move at least the spread's 2 pips before any profit shows up.

Who sets this price, and why

The spread is set by the participants that provide liquidity to the market — brokers, banks, and market makers committed to always having a buy side and a sell side available. They profit exactly from this difference, and the spread's size reflects the risk they take on by maintaining that constant offer. The more an asset is traded, with more people buying and selling all the time, the smaller the spread tends to be — which is why the dollar against the real usually has a much tighter spread than a very low-volume stock on the exchange.

Fixed spread and variable spread

Some instruments operate with a fixed spread, which doesn't change regardless of the hour or volatility. Others have a variable spread, which widens during moments of major news or low liquidity — for example, during a US employment data release, the dollar's spread can jump from 2 to 8 or 10 pips within seconds. Anyone trading news without paying attention to this usually gets surprised by an entry price much worse than expected.

The cumulative effect of the spread on your result

Suppose you make 20 trades a month on an asset with a spread equivalent to R$ 0.50 per trade (considering the traded lot). That already represents R$ 10.00 in fixed monthly cost, added to any other fees charged. For those trading very frequently — like in very short-term day trading — the spread can eat up a significant share of gross profit, even before taxes and brokerage fees. A numerical example: if your strategy expects an average gain of R$ 0.80 per trade, but the spread costs R$ 0.50 on each entry and exit, only R$ 0.30 of real margin is left — any imprecision in execution can wipe out this result.

How to reduce the spread's impact on your trades

• Prefer trading during the asset's highest-liquidity hours, when the spread tends to be tighter.
• Avoid opening positions in the seconds before or after major economic releases, when the spread widens.
• Compare the same asset's spread across different hours before deciding your trading window — platforms like Astron show the spread in real time next to the quote, which helps visualize this cost before confirming the order.
• For longer-term trades, the spread weighs proportionally less than on very short trades, since the expected price move tends to be bigger than the spread itself.

Bringing this into your daily routine

The spread isn't a hidden fee or a trap — it's the natural cost of a liquid market existing, where there's always someone on the other side ready to trade. But ignoring it when calculating whether a strategy is profitable is a common beginner mistake. Before repeating any trade at scale, it's worth adding the spread to the rest of the costs and checking whether the expected result still justifies the risk taken.