What is spread in forex, and why does gold start at a loss?

The spread is the difference between the price at which you can sell (bid) and buy (ask). Because you buy at the ask but would close by selling at the bid, a new buy trade usually starts with a small unrealized loss even if the market has barely moved. That is a cost of the trade, not by itself a platform error.

A simple forex example

Suppose EUR/USD has a bid of 1.1000 and an ask of 1.1002. The spread is 0.0002, or two pips for this pair. On a standard 100,000-unit lot in a USD account, that difference is about $20; on 0.01 lots it is about $0.20, before commission or other charges.

The example assumes those contract and quote settings. Check the actual symbol specification instead of using the same pip value for every currency pair.

What this means for XAUUSD

Suppose gold is quoted at a bid of $2,400.00 and ask of $2,400.40 per ounce. The spread is $0.40 per ounce. With a 100-ounce contract and a 0.01-lot position, exposure is one ounce, so the spread cost is roughly $0.40 before commission. These are example quotes, not current prices.

MT5 may show a spread in points. A point depends on the quote’s decimal places, so a number like 40 points is not automatically $40 or 40 pips. Use the bid, ask and symbol specification to see what it means in money.

Why spreads become wider

• There may be fewer buyers and sellers available, particularly around a broker’s daily rollover or a market reopening.
• Important economic news can make prices change quickly and reduce the prices available to trade.
• Your broker, account type and instrument can have different pricing rules. A displayed minimum spread is not a promise of the spread you will receive.

Spread is not the whole bill

Some accounts charge a separate commission. Holding a position overnight may add a swap charge or credit under your broker’s rules. Slippage is another difference: the actual fill can be worse or better than the price you expected.

Before comparing brokers, compare the total cost for your usual trade size and holding time, not just a headline “zero spread” offer. A small spread can still come with commission.

What to check before a trade

• Read bid and ask for the correct symbol and account.
• Check commission, swaps and contract size in the broker’s specifications.
• Keep a record of the spread at your normal trading time using a demo account.
• If the cost is unusually high, waiting or skipping is an option. A lower spread does not make a trade profitable.