What is a Spread?
A spread is simply the difference between the bid price (what the market is willing to pay) and the ask price (what the market is asking to sell) of a financial instrument.
For example:
– EUR/USD Bid: 1.1000
– EUR/USD Ask: 1.1003
– Spread = 0.0003 (3 pips)
If you buy and sell instantly, this 3-pip gap represents a small cost to you — it’s how much you “pay” to open that trade.
Types of Spreads
Fixed Spreads: Remain constant regardless of market conditions. Best for traders who value stability.
Advantages: Reliable during news, good for beginners
Drawbacks: Usually wider, less competitive during quiet markets
Variable Spreads: Fluctuate with market activity. Tighter in stable markets, but may spike during news.
Advantages: Lower cost in calm markets
Drawbacks: Can be unpredictable during volatility
How Brokers Earn from Spreads
Every time you enter a trade, you pay the spread. That’s where brokers make their margin — especially those offering commission-free accounts.
Example:
– You trade 1 lot of EUR/USD
– Spread = 1.2 pips
– 1 pip = $10
– Broker earns $12
iBull Capital keeps spreads low to support client profitability.
Tight vs. Wide Spreads
Even small differences affect results, especially for high-frequency traders.
Tight Spreads (e.g., 0.5 pips): Lower cost, better for scalping
Wide Spreads (e.g., 2-3 pips): Higher cost, suited for swing trading
Raw vs. Marked-Up Spreads
Raw Spreads + Commission: Exact market price, fixed fee. Transparent and ideal for advanced traders.
Marked-Up Spreads: Broker adds markup. Simpler but can be costlier.
iBull Capital offers both models to match trader preferences.
How to Measure Spreads
Spreads are measured in:
– Pips (forex)
– Points/ticks (commodities/indices)
– Percentage of transaction size
Compare brokers by average spreads, spread behavior during events, and demo testing.
iBull Capital's Spread Advantage
iBull Capital ensures:
– Top-tier liquidity access
– Low markup
– Real-time spread display
– Fast execution
Competitive spreads mean better trading performance and cost efficiency.
Spread Choice Based on Strategy
Different strategies demand different spreads:
– Scalping: Needs ultra-low spreads (Raw account)
– Day Trading: Prefers consistent tight spreads
– Swing Trading: Can tolerate moderate spreads
– News Trading: Needs awareness of spread spikes
Spread Manipulation: Red Flags
Be wary of:
– Sudden spread widening
– Misleading ‘from 0.0 pip’ claims
– Undisclosed markups
– Slippage during news
iBull Capital maintains transparency to avoid these pitfalls.
Why Spread Knowledge Matters
Understanding spreads helps you:
– Minimize trading costs
– Choose suitable brokers
– Align your strategy
– Avoid hidden fees
Conclusion
Spreads influence every trade. They define cost, impact profitability, and affect your strategy.
iBull Capital offers fair, low-cost spreads and fast execution to support your success.
Trade smart. Choose transparency. Choose iBull Capital.