Bid, Ask and the Cost of Trading
You always buy at the ask and sell at the bid — that gap is a real cost.
Written and reviewed by the Fundezy team · how we produce this
Every quote you see is really two prices: the bid (the best price at which someone will buy from you) and the ask (the best price at which someone will sell to you). The bid is always slightly lower.
The spread
Spread = ask − bid. It is the most visible trading cost: you buy at the ask, and if you sold that instant you would receive the bid — so every position starts slightly underwater by exactly the spread.
If EUR/USD quotes 1.0898 / 1.0900:
- You BUY at 1.0900 (the ask)
- Instant P/L on 1.00 lot = (1.0898 − 1.0900) × 100,000 = −$20 (2 pips)
You must gain the spread back before breaking even. On a 2-pip spread with a 20-pip target, 10% of your edge is eaten before you start; with a 5-pip scalping target, 40% is. This is why ultra-short-term trading is structurally hard.
Where spreads come from
Spreads widen when liquidity thins or uncertainty spikes: around major news, at session rollovers (5pm New York), and on holidays. They narrow in calm, liquid conditions — typically the London/New York overlap.
The simulator's simplifications
The Fundezy live trade terminal and the Strategy Tester price fills identically: a BUY opens at the ask and closes at the bid (mirrored for a SELL), so every round trip pays one full bid/ask spread — 0.8 pips on EURUSD, exactly the half-per-side math this lesson walks through. On top of the spread both charge slippage — the fill you get is not the fill you aimed at — modelled the same way in each: a draw that is adverse on average, a little worse the bigger the order, and occasionally in your favour. A take-profit does not slip: it is a limit order and fills at its own level. Both then charge the same $7-per-lot round-turn commission and the same swap. Real brokers widen spreads around news and can gap through stops, so no simulated cost is a ceiling for real money. Prefer strategies whose average winner is many multiples of the whole cost stack.
Other real-world costs
- Commission — per-lot fees on some account types.
- Swap/rollover — a daily interest charge for holding leveraged positions overnight.
- Slippage — stops and market orders can fill worse than requested during fast moves.
The simulator charges the same spread, slippage, commission and swap on both the live terminal and the tester — one execution model, not a harsher one in each. Every position pays the spread and the slippage on entry and exit, a $7-per-lot round-turn commission when it closes, and rollover at each 5pm-New-York crossing (21:00Z EDT / 22:00Z EST) while it's open: about 7 per standard lot per night on a long EUR/USD position, credited rather than charged when short. Wednesday nights charge triple to cover the weekend (broker convention — Saturday and Sunday nights charge nothing). You'll see each charge land in your balance and logged in the JOURNAL tab. Holding is a decision with a price, simulated or not.
Good habits formed now — trading timeframes where transaction costs (spread, commission and swap) are small relative to your target — transfer directly.
Key takeaway
Costs are certain; profits are not. Choose setups where the expected move dwarfs the transaction cost.
By the numbers
Costs on this platform are concrete and checkable: every fill crosses the bid/ask spread (EURUSD 0.8 pips, so a round trip opens 0.8 pips down), the live terminal charges a $7-per-lot round-turn commission when a position closes, plus rollover (swap) at each 5pm-New-York crossing (21:00Z EDT / 22:00Z EST) — tripled on Wednesday nights to cover the weekend, broker convention. The edge arithmetic every cost decision reduces to: a 2-pip spread against a 20-pip target consumes 10% of the edge before it starts; against a 5-pip scalping target, 40%.
Check your understanding
4 questions · answer all, then submit.