Spread
The price difference between the best bid and best ask — the implicit cost of opening and closing a position, quoted in pips.
Definition
The spread is the difference between the price a trader can buy at (ask) and the price they can sell at (bid). On EUR/USD, a quote of 1.0850/1.0851 has a 1-pip spread. The spread is the implicit cost of trading: a trader who buys at the ask and immediately sells at the bid loses the spread. Spreads are either fixed (constant regardless of market conditions, set by the broker) or variable (floating with market liquidity — tighter during peak hours, wider during news, weekends, and illiquid sessions). Most prop firm accounts use variable spreads from their liquidity provider; fixed-spread accounts are rarer and usually come with other trade-offs.
Example
Why It Matters
Spread widening is one of the quietest ways a prop firm account can breach drawdown. A position held during a news event or the Friday rollover can see its unrealized loss widen by tens of pips purely from spread — with no underlying price movement at all. Equity-based drawdowns count this widening immediately; balance-based drawdowns only count it if the trader closes the position during the widening. Scalpers are hit hardest because their edge-per-trade is smallest relative to the round-trip spread cost.