Spread
Understanding CDF Trading Spreads
What is a Spread?
A spread is the difference between the bid price (price at which a client may sell) and the ask price (price at which a client may buy) of a financial instrument.
It represents a direct cost of trading Contracts for Difference (CFDs), as positions are opened and closed at different prices.
Spreads may vary depending on market conditions, the instrument traded, and periods of increased market volatility.
Traders should be aware that spreads can impact the overall profitability of their positions.
How Spreads are Quoted
Spreads are expressed in pips, which represent the smallest unit of price movement of a financial instrument.
For example, if EUR/USD is quoted at a bid price of 1.1242 and an ask price of 1.1245, the difference between the two prices is 0.0003, which corresponds to a spread of 0.3 pips.
Calculating Spread Cost
Spread Cost = Spread (in pips) × Pip Value × Trade Size (in lots)
For example, if the spread is 0.3 pips and you trade 1 mini lot (10,000 units) on EUR/USD, where the pip value is USD 1 per pip:
0.3 × 1 × 1 = USD 0.30
The spread cost is approximately USD 0.30 and is automatically converted into the account’s base currency.
How Spreads are Quoted
Spreads are expressed in pips, which represent the smallest unit of price movement of a financial instrument.
For example, if EUR/USD is quoted at a bid price of 1.1242 and an ask price of 1.1245, the difference between the two prices is 0.0003, which corresponds to a spread of 0.3 pips.
View our Typical Spreads below
