Web Trader MT5
Dealing spread is the gap between the price that a market-maker will offer (the offer or ask) and the price that they will buy at (the bid). It does not appear anywhere on any invoice as a line item, but it is a very real cost, and one that is quietly built into every single trade that you conduct.
If EUR/USD is quoted at 1.1050/1.1052, you buy at 1.1052 and can only immediately sell at 1.1050. You’re two pips behind before the market has moved a single tick. The compensation the market-maker receives for providing liquidity and accepting the other side of your trade is that gap.
In deep, liquid markets, the spread is tight as competition among dealers maintains the spread tight. In thinner markets, or during times of stress or uncertainty, the spreads increase, in some cases dramatically.
Example: A retail forex trader decides to purchase GBP/USD minutes before a Bank of England rate decision. Normally, the spread is 1 pip. Right now it’s 8.
The market-maker on the other side is widening the spread because they are not sure which way the decision will send the pound, and they need that cushion to manage the risk he is taking on.
