Reference · Order Execution
Bid-Ask Spread: Quotes, Crossings and Display Units
Calculate a bid-ask spread in price units, pips and cash, with a worked forex quote and checks for timestamps, quantity and execution differences.
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Published by FxTrusts, a supplier of brokerage and prop firm technology. Prepared with AI-assisted research and drafting; reviewed against the cited public sources. Examples are illustrative. Product links describe our services.
What is Bid-ask spread?
The bid-ask spread is the ask price minus the bid price for a comparable quote. It can be expressed in price units, pips, ticks or a monetary amount for a stated quantity. It is a quote measure and should be distinguished from the difference between a reference quote and an actual fill.
Use comparable sides of the same market
A bid is a price at which the quoted buyer is willing to buy; an ask is a price at which the quoted seller is willing to sell. For the platform user, a market buy generally interacts with the ask and a sell with the bid. To calculate a meaningful spread, use the same instrument, compatible quantity, source context and timestamp. Combining a stale bid with a new ask can produce an artificial result.
Choose the reporting unit explicitly
Subtract bid from ask to obtain the price-unit spread. Divide by the declared pip size to express it in pips, or by the tick size for ticks. Those denominators need not be the same. Multiplying a linear forex spread by base-currency units gives a quote-currency amount for that quantity. If the account currency differs, a further conversion is required. A report should not display a bare number such as two without its unit.
Quantity and execution can change the practical comparison
The best quoted spread may apply only to a small displayed size. A larger order can consume several price levels, and actual fills can differ from the snapshot. This is why a quote spread and execution slippage answer different questions. Comparing an entry ask with an exit bid also incorporates market movement between the events. Do not attribute the whole difference to the spread unless prices and assumptions are held constant.
Keep other costs outside the spread calculation
Commission, overnight financing, conversion charges and other declared fees can affect the total transaction result. They should be shown separately before a combined cost illustration is constructed. A spread described as raw or zero does not establish a zero-cost trade or continuous availability at that price. For platform review, capture the published pricing model and verify how the interface labels spread units and any additional charges.
A synthetic EUR/USD quote
Assume bid 1.10000 and ask 1.10020, a pip size of 0.0001 and a linear quantity of 10,000 EUR. The quoted spread is 0.00020 USD per EUR, or two pips. Its monetary equivalent for that quantity is 2 USD. This holds the quote constant and excludes commissions, financing and conversion; it is not a complete realized trade result.
| Measure | Calculation | Result |
|---|---|---|
| Price spread | 1.10020 − 1.10000 | 0.00020 USD/EUR |
| Pip spread | 0.00020 ÷ 0.0001 | 2 pips |
| Quantity equivalent | 10,000 EUR × 0.00020 USD/EUR | 2 USD |
Implementation checklist
- Use synchronized bid and ask values for the same instrument and quantity context.
- Declare pip or tick size before converting the spread.
- Separate quoted spread from quote-to-fill slippage.
- Present commission and financing separately when discussing total costs.
Sources
These documents support the reference. Check the original publication for current requirements and the limits of its scope.
- MetaTrader 5 price datawww.metatrader5.com
- OANDA v20 instrument definitionsdeveloper.oanda.com
- MetaTrader 5 trading principleswww.metatrader5.com
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