Good morning. During major news events like NFP or CPI, spreads on some pairs can jump from 0.5 pips to 10+ pips in seconds. That means a single standard-lot trade can suddenly cost over $100 just to enter.
It’s not just the candle that bites on news days, the spread does too.
-Shaun A, Jonathan Kibbler, Jordon Mellor
MARKETS
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TRADER INSIGHTS
The Spread Trap Most Traders Ignore
Is it just me, or are you also picky when it comes to spreads?
I’ll be honest, I don’t like giving away “free pips” to the market. It’s one thing to lose on a bad setup, but it’s another to bleed money on costs you can control. The spread might look tiny on the screen, but over weeks and months it’s one of the biggest silent killers of performance.
Here’s what you need to know about why spreads matter more than most traders think:
1. The Math Doesn’t Lie
Take EUR/USD with a 0.5 pip spread. On a standard lot, that’s $5 per trade. Now imagine trading the same pair at a 2.0 pip spread, that’s $20 per trade. Make 100 trades in a month, and you’ve just paid $2,000 in spread versus $500. That’s $1,500 gone, not because of bad analysis, but because of cost.
The bid–ask spread is the direct cost of entering and exiting a trade, and wider spreads make it harder to break even, especially in volatile or thin markets. (source:Investopedia)
2. Wide Spreads Force You to Work Harder
Every extra pip means you need a bigger move just to break even. A 10-pip scalp isn’t really 10 pips if the spread takes two off the top. Suddenly, your strategy needs higher accuracy just to keep the same profit level. It’s like running with a weight vest you didn’t choose.
3. The Impact is Worst on Smaller Accounts
For retail traders running modest accounts, spread costs hit harder. You’re not just paying more per trade, you’re shrinking your ability to scale. Wide spreads quietly lower your effective risk-to-reward, making it feel like you’re always one step behind.
4. Why Liquidity Matters
This is why majors like EUR/USD, USD/JPY, and GBP/USD dominate. They’re not just liquid, they’re cheaper to trade. Exotic pairs may look exciting, but when the spread is 30–50 pips wide, your edge is gone before you even click. It reminds us traders that “spreads are how brokers earn on no-commission accounts,” so ignoring them is like ignoring a permanent fee. (source:babypips)
My Takeaway
Spreads are the hidden tax of trading. Ignore them, and you bleed edge every single trade. Respect them, and you immediately put yourself ahead of most retail traders. Tight spreads aren’t about saving pennies, they’re about protecting your strategy’s foundation.
In this game, every pip counts, especially the ones you don’t see.
TRADER INSIGHTS
Trading vs. Investing: Which Tool Should Retail Traders Use?
One of the biggest advantages we have as retail traders is flexibility. We’re not tied down, we don’t have to answer to clients, and we can switch between strategies whenever the market demands it. We should be grateful for this.
I also think that different assets require different tools.
To Trade or Invest?
I have always considered trading as the short term tool to use when looking to capture market volatility over minutes, hours or days. I align macroeconomic events with sentiment and technical opportunities with the goal to profit from short term movements. I feel that FX, Indices and commodities are great for these short term movements.
On the other hand investing is about holding positions for weeks, months or even years based on the bigger picture. You don’t really look at the technical movements in the market because the goal is to benefit from longer term appreciation. Stocks are my go to for investing, but you can also think about physical commodities such as gold and silver.
The Retail Trader Advantage: Flexibility
The truth is you don’t have to pick one or the other. As a retail trader, you can adapt.
Sometimes the market screams for short-term trading.
Other times, the setup favors longer-term investing
Think of it like having two different tools in your kit. You wouldn’t use a hammer when you need a screwdriver, and you don’t need to trade when the market is better suited for investing.
My Thoughts
Don’t box yourself in. The best traders I know aren’t “just day traders” or “just investors.” They’re flexible. They read the environment, pick the right tool, and manage risk accordingly.
Trading and investing aren’t rivals. They’re two sides of the same coin, and knowing when to switch between them can give you the edge.
GAMES
Trading Brain Training
I don’t print cash, but I steer the flow,
Hawk or dove, my signals show.
Raise or cut, I move the street,
Markets shift with every meet.
What Am I?
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ANSWER
Answer: The Federal Reserve (The Fed)