Open any trading platform and every pair shows two prices, not one. Beginners click past this detail; the market charges them for it on every single trade. This sheet teaches you to read a quote panel properly: which of the two prices applies to you, what the gap between them costs in real money, and why your profit-and-loss readout starts red the moment you enter.
Two prices, one quote
A EUR/USD panel showing 1.0850 / 1.0851 is quoting two different transactions. The bid, the lower number, is the price at which the market will buy from you — so it is what you receive when you sell. The ask, the higher number, is the price at which the market will sell to you — what you pay when you buy. The rule that decides which applies to you never changes: buy at the ask, sell at the bid.
Notice that both directions hand you the less favourable price. Buying? You pay the higher number. Selling? You receive the lower one. That is not your broker being uniquely unkind — it is how every dealer market on Earth works, from currencies to used cars. The difference between the two numbers is where the cost of immediate execution lives.
The same two prices also govern how positions close. Closing a buy position means selling — at the bid. Closing a sell position means buying it back — at the ask. So a full round trip always touches both prices once, which is why the spread is paid exactly once per trade, however long the position stays open.
The decoder, in five steps
Run this sequence on any quote panel until it takes you five seconds. It is the procedure the rest of this sheet unpacks:
- Find both prices and name them: lower = bid (you sell here), higher = ask (you buy here).
- Take the gap between them in pips — on most pairs, count at the fourth decimal.
- Look up the pip value for your pair and trade size; on EUR/USD it is about $10 per pip per standard lot.
- Multiply gap × pip value × lots: that is your entry cost in money.
- Decide whether the trade you are considering is still worth that toll — before clicking, not after.
The spread: your first cost, computed
The gap between bid and ask is the spread, measured in pips — the smallest conventional price step, the fourth decimal on most pairs. At 1.0850 / 1.0851 the spread is one pip. To turn that into money, multiply by what a pip is worth at your trade size. On EUR/USD, one pip on one standard lot is about $10.
spread cost = spread in pips × pip value × lots
= 1 pip × $10 × 1.0 lot = $10
= 1 pip × $10 × 0.1 lot = $1
= 1 pip × $10 × 0.01 lot = $0.10
Three things follow. The cost scales exactly with your size — trading ten times larger costs ten times more to enter. It is charged on entry, not on exit: you cross the spread once per round trip. And it is completely indifferent to your result — a winning trade and a losing trade on the same pair at the same size paid the same toll at the door.
Why does the spread exist at all? Someone is standing ready to trade with you instantly, in either direction, at any hour the market is open. The spread is that someone's compensation for the risk of holding what you hand them. It is not a fee invented by retail brokers — though brokers do add their margin to it, which is why comparing typical spreads across brokers is one of the few comparisons genuinely worth your time.
Why your P/L starts red
Buy EUR/USD at the ask, 1.0851, and the platform immediately values your position at the price you could close it: the bid, 1.0850. You are one pip down — about $10 on a standard lot — before the market has moved at all. Nothing has gone wrong, and no one has cheated you. The platform is simply being honest with you about what the position is worth right now, valued at the only price anyone will actually pay you for it.
It also tells you your real break-even point. The price must move one pip in your favour just to bring the position back to zero; only from there does profit begin. The same arithmetic works against you symmetrically: if the price instead moves one pip against you, the position shows two pips of loss — the spread you paid plus the move. Wide-spread instruments push the start line further away in both directions, which is one more reason beginners stay on tight-spread majors.
Reading a quote panel: worked examples
Two panels, decoded the way you should learn to decode them at a glance. Prices are illustrative; the method is the point.
| Pair | Bid / Ask | Spread | Cost at 1.0 lot | Cost at 0.1 lot |
|---|---|---|---|---|
| EUR/USD | 1.0850 / 1.0851 | 1.0 pip | about $10 | about $1 |
| USD/JPY | 155.40 / 155.42 | 2.0 pips | about $13 | about $1.30 |
Note the JPY detail: on yen pairs a pip is the second decimal, not the fourth, and its dollar value per lot is not fixed at $10 — at this price it is roughly $6.40, so two pips cost about $13 on a full lot. The reading method never changes: find the two prices, take the gap in pips, multiply by pip value and size. If you can do that on any panel, you can price your own entry before clicking — which is exactly the habit this sheet is for.
Platforms add two display habits worth knowing. Most quote a fifth, smaller digit — a fractional pip, one tenth of a pip — so you may see 1.08503 / 1.08512, a spread of 0.9 pips. And panels often shrink the “big figure” (the 1.08 part) to highlight the digits that are actually moving. Neither changes the method: the gap in pips is still the gap in pips, whichever digits the designer chose to enlarge.
One honest caveat: spreads are not constant. They breathe with the market — tightest in deep liquidity, wider in thin hours, and sometimes much wider for a few seconds around major news. The quoted spread you see in a calm moment is the floor of your cost, not a promise.
Check it yourself
Your pair, your size — the entry cost in money, not marketing.