Trader Toolkit · Visualiser

Spread, visualised

Bid, ask and the distance between them.

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Mind the spreadbefore you tread.

Your figures

Result

Spread

Type the spread you see on your platform.

Position size

Instrument

1 standard lot = 100,000 EUR

Account currency

Back to inputs

Cost to enter

20.00 USD

paid through the price on 1 lot of EUR/USD

Move needed to break even

2pips

in your favour, before any other cost

Schematic, not a price chart. A buy is filled at the ask (the dashed entry line). The position is valued at the bid, which starts 2 pips lower: that gap is the cost. Only when the bid has risen to the entry line does the trade break even. The two quotes drift upwards together to show that moment, then return.

Position value the instant after entry: −20.00 USD
Value of one pip at this size: 10.00 USD
Spread as a price difference: 0.0002

SimulationA calculation on the figures you entered. The spread is an input here, not a GIO4X quote. Educational information, not investment advice or a recommendation to trade.

How it works

Formula

spread = ask − bid; cost = spread × pip value × lots

With your numbers

1Spread as a price difference (ask − bid)2 pips × 0.0001 = 0.0002
2Value of one pip on one lot, in USD0.0001 × 100,000 = 10.00 USD
3Cost to enter (spread × pip value × lots)2 × 10.00 × 1 = 20.00 USD
4Move needed to break even2 pips: the bid must rise to the price you bought at

Assumptions

The spread stays the same from entry to exit. In practice it varies, and it tends to widen around news, at the daily rollover and when a market is thin.
A buy is filled at the ask and valued at the bid; a sell is filled at the bid and valued at the ask. Either way a new position starts behind by the spread.
Commission and overnight financing are separate costs. The Cost Lab adds all three.
The diagram is a schematic of the mechanism. It is not a chart of any price.

Terms used

In plain language

You buy at one price and are valued at another.

Every instrument has two prices at any moment: the ask, at which you can buy, and the bid, at which you can sell. The ask is the higher of the two, and the distance between them is the spread.

When you buy, you pay the ask, but the position is worth what you could sell it for, which is the bid. So a new position starts with a small loss equal to the spread, and the price has to move in your favour by that much before the trade is back to nothing. For a sell the same thing happens in mirror image.

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How it works

Formula

spread = ask − bid; cost = spread × pip value × lots

With your numbers

1Spread as a price difference (ask − bid)2 pips × 0.0001 = 0.0002

2Value of one pip on one lot, in USD0.0001 × 100,000 = 10.00 USD

3Cost to enter (spread × pip value × lots)2 × 10.00 × 1 = 20.00 USD

4Move needed to break even2 pips: the bid must rise to the price you bought at

Assumptions

The spread stays the same from entry to exit. In practice it varies, and it tends to widen around news, at the daily rollover and when a market is thin.

A buy is filled at the ask and valued at the bid; a sell is filled at the bid and valued at the ask. Either way a new position starts behind by the spread.

Commission and overnight financing are separate costs. The Cost Lab adds all three.

The diagram is a schematic of the mechanism. It is not a chart of any price.

Terms used