Trading cost education
Advertised Spreads vs Live Spreads
An advertised spread is a number a broker publishes. A live spread is the difference between the bid and the ask being quoted at one specific moment. Both are legitimate figures, but they answer different questions — and confusing them is one of the easiest ways to misjudge what a broker costs.
This page explains how advertised, typical and live spreads relate to each other, what makes a quoted spread move during the trading day, why a single observation cannot describe a broker’s normal cost, and why spread on its own is never the whole cost of a trade.
Educational reference only. Nothing here is investment advice or a recommendation of any broker or instrument. Every number on this page is a hypothetical illustration used to explain a concept — none of them is a measurement of a named broker. Broker terms change; confirm current pricing with the provider.
Three different figures, three different meanings
Most confusion about spreads comes from treating three separate figures as if they were one. They are produced in different ways, they describe different things, and only one of them exists at the moment you trade.
| Figure | What it is | What it does not tell you |
|---|---|---|
| Advertised / minimum spread | A headline figure, often written as “from 0.0 pips”. It describes the tightest quote the broker expects to show under favourable conditions. | It is the bottom edge of a range, not a representative value. It should not be read as the spread normally available on a trade. |
| Typical spread | A broker-published representative figure, usually derived from the broker’s own sampling of its quotes over some period and account type. | It is still a published figure, not a guaranteed execution cost, and brokers may derive it from different periods, account types and methods. |
| Live spread | The difference between the bid and the ask being quoted right now, on one instrument, at one broker, for one account type. | A single reading describes one moment. On its own it says nothing about what the same account normally costs. |
The short version
An advertised minimum tells you what is possible. A typical spread tells you what the broker says is ordinary. A live spread tells you what is quoted at one instant. None of the three is, by itself, the cost of your trade — that only appears once you combine every cost component that applies to the way you actually trade.
Why live spreads vary
A quoted spread is not a fixed property of a broker. It is the price of immediacy at a given moment, and it moves with the conditions the broker is pricing into. The same instrument, at the same broker, on the same account, can be quoted very differently minutes apart.
Liquidity
Spreads reflect the depth available to the broker. When fewer participants are quoting, the gap between bid and ask tends to widen.
Volatility
When prices move quickly, quoting carries more risk. Spreads commonly widen around scheduled economic releases and unscheduled news.
Trading session
Session overlaps, session opens and closes, the daily rollover window and thin holiday periods all show different spread behaviour on the same instrument.
Account type
A raw or commission-based account typically shows a tighter spread plus an explicit commission; a commission-free account typically carries a wider spread. Same broker, different figures.
Market conditions
Stressed conditions change how liquidity providers quote. Behaviour observed in a calm week is not a promise about a disorderly one.
Instrument and broker model
Major pairs, minors, indices and commodities behave differently, and brokers source liquidity and apply markup in different ways.
Because these factors move independently, spread behaviour is a distribution over time rather than a single value. That is why a comparison has to state which figure it is comparing, for which account type, over which conditions.
One observation is not a broker’s trading cost
Screenshots of a spread widget circulate constantly, in both directions: a very tight quote offered as proof that a broker is cheap, or a very wide one offered as proof that it is not. Neither claim follows from a single reading. A quote captured at one instant is one point drawn from a distribution that changes across the session — it describes that instant and nothing more.
| When the reading was taken | Quoted spread | What a screenshot of it would “prove” |
|---|---|---|
| Deep, quiet liquidity | 0.3 pips | That the broker is extremely cheap — on the strength of one favourable moment. |
| Ordinary mid-session conditions | 0.7 pips | Closer to ordinary, but still one reading rather than a normal cost. |
| Thin session, low participation | 1.4 pips | That the broker is mediocre — on the strength of one thin moment. |
| Around a scheduled release | 2.6 pips | That the broker is expensive — on the strength of its single worst moment. |
Hypothetical illustration. These figures are invented to show the shape of the problem. They are not measurements, they do not describe any named broker, and they are not a claim about how wide any real spread goes.
A reading is not a rate change
Quoted spreads move continuously as conditions change. That movement is normal market behaviour, not evidence that the broker has revised its published pricing.
Timing decides the answer
Anyone can produce a flattering or damning reading by choosing when to look. Comparisons only mean something when the timing is the same for everyone being compared.
Compare the same account
A reading from one account type says nothing about another. Spread, commission and eligibility differ between account types at the same broker.
If you want to know whether a broker’s published pricing has actually changed, that is a different question from what its spread is doing right now — and it is answered by tracking published terms over time. VeriLots does that on the broker fee changes page.
Spread is one component, not the total
Even a perfectly measured spread would not tell you what a trade costs. Depending on your account, your instrument and how long you hold the position, several components can apply at once, and a broker that looks cheapest on one of them is not automatically cheapest on the total.
Spread
The gap between bid and ask you cross when entering and exiting. Quoted in pips or points, and only meaningful once converted into money for your position size.
Commission
An explicit per-volume charge on commission-based accounts. A tighter spread paired with a commission can easily total more than a wider commission-free spread — or less.
Swap (overnight financing)
Applied at each rollover for positions held overnight. It can be a cost or a credit depending on instrument, direction and broker. See swap explained.
Currency conversion
When a result is denominated in a currency other than your account currency, the conversion applied can carry its own cost.
Other applicable charges
Account, inactivity, funding or withdrawal terms may also apply. Which ones are relevant depends on the broker, the account and your jurisdiction.
The number that matters
Total trading cost is the combination of the components that apply to your instrument, account type, position size, holding period and account currency — expressed as money, not pips.
Why small differences are worth measuring
The reason any of this matters is arithmetic. A fraction of a pip is easy to dismiss on one trade and hard to dismiss over a year of them, which is why it is worth knowing which figure you are comparing rather than assuming the headline number applies.
| Monthly volume | Effect of a 0.2 pip difference | Over twelve months |
|---|---|---|
| 5 standard lots | $10 | $120 |
| 20 standard lots | $40 | $480 |
| 50 standard lots | $100 | $1,200 |
Arithmetic illustration. Assumes standard lots on a USD-quoted pair where one pip is worth about $10 per standard lot, the difference counted once per round turn, and the same volume every month. It is a multiplication, not a measurement of any broker, and your own pip value, instrument and trading pattern will change the result.
How to compare brokers on spread properly
A fair comparison is mostly about holding things constant. Once the basis is the same on both sides, the remaining difference is informative.
- Fix the instrument. Spread behaviour on a major pair tells you little about a minor, an index or a commodity.
- Fix the account type. Compare a commission-based account with another commission-based account, and include the commission on both sides.
- Fix the figure. Compare typical against typical. A minimum on one side against a typical on the other is not a comparison.
- Fix the conditions. If you use live readings, they must cover the same sessions and the same conditions on both sides, and there must be enough of them to describe ordinary behaviour rather than one moment.
- Convert to money. Turn spread, commission, financing and conversion into one figure for your position size, holding period and account currency.
- Re-check later. Published terms are revised. A comparison is a snapshot of the terms available when you made it.
Common spread mistakes
- Reading a “from” spread as a normal spread. A minimum describes the best case the broker expects to show, not the quote you should plan around.
- Ranking brokers from one screenshot. A single reading cannot establish normal cost, whichever direction it happens to favour.
- Ignoring the commission on a raw account. A spread that looks unbeatable next to a commission-free account is not being compared on the same basis.
- Forgetting the holding period. Overnight financing accrues for every night a position stays open and can outweigh the spread difference entirely.
- Comparing pips instead of money. A pip is worth different amounts on different instruments, position sizes and account currencies.
- Treating a widening quote as a repricing. Spreads moving with conditions is ordinary market behaviour; a change to published terms is a separate thing entirely.
How VeriLots presents spread figures
Because a spread figure is only as useful as the basis behind it, the basis is stated rather than implied.
Public comparisons use typical spreads
Public and logged-out spread comparisons are based on broker-published typical spreads, so every reader is comparing the same stable basis rather than a moment-in-time quote.
Costs are compared as money
Spread, commission, financing and conversion are brought into one figure for a stated scenario, because pips alone cannot be added together meaningfully.
Like-for-like or not at all
Comparisons are made within the same instrument and the same account basis. Figures that are not comparable are not placed side by side.
Published terms are tracked over time
Changes to broker-published terms are reported as changes to published terms — never inferred from a quoted spread moving with market conditions.
Figures are indicative
Broker terms can change at any time and can vary by account type, platform, session and jurisdiction. Confirm current terms with the provider before trading.
Illustrations are labelled
Numbers used to explain a concept are labelled as illustrations, so an example is never mistaken for a measurement of a named broker.
Spread questions, answered
What is the difference between an advertised spread and a live spread?
An advertised spread is a figure a broker publishes in its marketing or contract specifications. A live spread is the difference between the bid and the ask that the broker is actually quoting at one specific moment. The published figure describes pricing in general terms; the quoted figure is what exists when you press the button. They are related but they are not the same measurement, and they can differ in either direction.
Is the advertised minimum spread the spread I will normally get?
No. A minimum or from spread describes the tightest quote a broker expects to show under favourable conditions, not the quote you should expect on a normal trade. Treat a minimum as the bottom edge of a range rather than a representative value, and compare brokers on typical figures and on realistic total cost instead.
What is a typical spread?
A typical spread is a broker-published representative figure, usually derived from the broker's own sampling of its quotes over some period. It is more useful for comparison than a minimum, because it describes ordinary conditions rather than best-case ones. It is still a published figure, not a guaranteed execution cost, and different brokers may derive it from different periods, account types and methods.
Why do live spreads change during the day?
Quoted spreads reflect the liquidity available to the broker at that moment. Liquidity and volatility change with the trading session, around scheduled economic releases, at the daily rollover, and when market conditions are stressed. The same instrument at the same broker can therefore be quoted very differently at different times of day.
Does a single live-spread observation tell me what a broker costs?
No. One observation is one point out of a distribution that changes throughout the session. A single tight reading does not prove a broker is cheap, and a single wide reading does not prove it is expensive. To say anything about normal cost you need many observations across different sessions and conditions, for the same instrument and the same account type.
Is the live spread the full cost of a trade?
No. Spread is one component. Depending on the account and the instrument you may also pay a commission, an overnight financing amount (swap) for every night the position is held, and a currency conversion cost when the result is converted into your account currency. Other charges may apply as well. Only the combination of the applicable components describes what a trade actually costs.
Why do two brokers quote different spreads on the same pair at the same time?
Brokers source liquidity differently, apply their own markup, and offer different account types. A raw or commission-based account usually shows a tighter spread plus an explicit commission, while a commission-free account usually carries a wider spread. Comparing the spread alone across those two structures is not a like-for-like comparison.
Which spread figure does VeriLots show publicly?
Public and logged-out comparisons on VeriLots are based on broker-published typical spreads, so that everyone sees the same, stable, comparable basis rather than a moment-in-time quote. Whichever figure you compare on, treat it as indicative: broker terms change, and you should confirm current pricing with the provider before you trade.
How should I compare brokers on spread?
Compare like with like: the same instrument, the same account type, the same quoting convention, and the same trading pattern. Then convert spread, commission, financing and conversion into one money figure for the position size and holding period you actually trade, in your account currency. A spread number on its own is not a ranking.
Stop comparing headlines. Compare totals.
A spread figure only becomes useful when you know which figure it is, which account it belongs to, and what it adds up to alongside commission, financing and conversion. Run the True Cost Engine with your instrument, lot size, direction, account currency and holding period, then compare the brokers you are choosing between on that basis.
VeriLots publishes independent cost research. This page is educational and does not constitute investment advice or a recommendation of any broker or instrument. Related reading: the hidden cost of trading, swap explained and our methodology.