Bid-Ask Spread in Crypto Trading: Why It Is Wider Than in Forex and What It Costs You

What Is the Bid-Ask Spread: Quick Definition

The bid is the highest price any buyer existing on exchange or within a broker is willing to pay for an asset at that exact moment. The ask is the opposite: the lowest price any current seller is willing to accept. There is always a difference between the two. If any buyer accepts the lowest price of the seller, the ask moves up, because it is now accounting for the price of the next seller in line.

The difference between bid and ask is the spread. It has to be paid each time an order (a trade) is opened. This is what is spread in crypto trading: a difference in prices asked by the seller and the buyer. Spread is always paid, no matter how long the trade lasts, or if it returns a profit or a loss.

Spreads are separate from crypto spread betting or cryptocurrency spread betting, because these are the leveraged products that are all about the direction of a price move, rather than the ownership of underlying asset. The bid-ask spread most commonly is used in ordinary buying and selling, for example on trade platform or on an exchange. It's present not only in spread-betting products, it exists in most markets, unless the platform itself has decided to make itself spread-free.

The Bid-Ask Spread Formula

The spread can be expressed in pips (on FX markets), or as a percentage of price of the asset. There's more than one convention for turning it into a percentage: this article divides the difference by the ask price, then multiplies by 100 (ask minus bid, divided by ask, times 100). Other sources instead divide by the bid price, or by the midpoint between bid and ask, which produces a slightly different number for the same quote. None of these conventions is wrong, but comparing spreads across sources only makes sense if you know which one is being used.

For example, if Bitcoin is quoted at 62,000 (the most agreeable buyer) and ask of 62,058 (the most desperate seller), the spread here is counted as 58 units. This is roughly 0.10 percent of the ask price. That percentage can easily be compared across exchanges, to see which one offers the best spread (meaning, the lowest, so you pay less of a fee). Percentage works well in this case, because same 58 units spread could mean very different things depending on if it's applied to an asset worth $60k, or $600.

Why Forex Spreads Are Usually Tight: A Centralized Reference Price

Major fx pairs usually have the lowest spreads. Forex isn't a centralized exchange market at all, it trades over-the-counter (OTC), through a global network of banks, brokers, and liquidity providers, rather than through a single order book. But because so much capital and so many participants operate in this OTC interbank market, constant arbitrage between them keeps quotes tightly aligned across venues, giving pairs like EUR/USD a broadly consistent, globally recognized reference price that doesn't deviate much, even between different platforms. For a pair such as EUR/USD, typical spread is usually below 10 pips (below 0.001), and sometimes as low as 1 pip. That is just 0.01% of the total price, and is one of the tightest bids and asks in the entire trading industry.

In comparison, crypto spreads are relatively wide, and ever-changing, because crypto is not trading globally, is dependent on a few key exchanges, and has no major banks competing with each other for customers. This is why cryptocurrency spread betting is popular here: spreads fluctuate more dramatically, creating more interesting trade opportunities.

Why Crypto Spreads Are Usually Wider

For one, cryptocurrency markets lack a single, key reference price. Current liquidity conditions on any one exchange, like Binance, can impact the global crypto market (like what happened on 10/10). There is no shared interbank rate, instead the market makers take the brunt of effort for the price creation. They obviously want wider spreads for more earning potential, even if they are 'competing' with each other for customers and profits.

Bitcoin and Ether, as the two biggest assets, have relatively tighter spreads (in percentage terms) than less known altcoins. For millions of crypto projects, there are not many buyers and sellers active at any second. Therefore, an order book is thinner. It means a wider gap is created between the lowest seller and the most desperate buyer.

Unless market makers step in, spreads can get almost arbitrarily wide. Publicly discussed Coinbase spread fees are often cited as an example of this, since the exchange sets and quotes its own bid-ask prices rather than pulling from a combined, market-wide rate. This pricing approach is sometimes criticized as less competitive than what's available elsewhere, though exactly how it compares varies by pair and by which specific competitor you check against, rather than being uniformly wider than other CEXes or DEXes as a rule. This approach also doesn't carry the same risk as relying on outside market makers, who can occasionally fail to hold up their side of a quote during a liquidity crunch like what happened on 10/10.

A Worked Example: Comparing Spread Cost

In the table below you can see how spreads between asks and bids are varied across asset pairs. These are not live quotes, but rather, illustrative figures.

Spread costs rise as total trading volume and depth of order books fall. It also isn't a separate fee charged twice, once on entry and once on exit; it's built into the two prices themselves. You buy at the ask, and if you closed the position right away, you'd sell at the bid, which is lower. The gap between those two prices, the spread, is the built-in round-trip cost of the trade, not an extra commission stacked on top of it.

How Spread Affects Scalping Specifically

Scalpers have tightest margins, and often open many trades within minutes or even seconds from each other. Because a scalping approach depends on capturing a small number of points (or pips) in every trade, spread here takes a proportionally larger share of the potential gain away. This is why scalpers are most sensitive to spread, especially compared to swing- or position traders. Spreads can often make or break a strategy for them.

A scalper targeting a 0.3% move on an asset where a spread is a 0.1% already is pretty much giving away a third of their profits entirely, before even closing the trade. Meanwhile, the same 0.1% spread would barely register for a swing-trader targeting a 5% move of the price during multiple days. This is one of the reasons some scalpers have moved on to crypto spread betting, or trading in the Quick Trading mode on Pocket Option, where the classic bid-ask spread isn't charged as a separate transaction cost.

Why Spreads Widen at Night and on Weekends

Trading volume shifts throughout the day and week, depending on how many participants are active in the market and how much capital they're deploying. Forex has clear, well-documented session-based liquidity patterns tied to specific trading hours in specific time zones, since it's still ultimately anchored to business hours at banks and institutions. Crypto is different: it trades 24/7 across a global set of exchanges with participants spread across every time zone, so there isn't one single low-liquidity night that applies to the whole market the way there is in forex. What does tend to hold up more consistently is that spreads widen over weekends, when institutional desks are largely offline, and on pairs whose own order books are thin to begin with.

With fewer participants buying and selling in these windows, spreads on the affected pairs widen. Market makers can't fully compensate for it, because they have to consider the risks of holding a position without a ready counterparty on the other side. This effect tends to be more noticeable and more consistent on lower-volume altcoins than on Bitcoin or Ether, which retain deep enough liquidity most of the time to keep spreads comparatively stable.

How to Reduce the Impact of a Wide Spread

You should always read the live spread on a chart before entering a trade, if you're trading assets with this fee model (and not something a QT mode, with standardized payouts). To reduce paying spread, you can:

• Favor majors, or other higher volume assets and coins.

• Trade during peak overlaps, when liquidity is by far the highest.

• Compare spreads across a few platforms, to see which one offers the best environment for the pair you are trading.

• Consider cryptocurrency spread betting, or other alternative modes of trading, like QT mode, where the classic bid-ask spread isn't charged as a separate transaction cost.

• Size orders such that spread has only a small impact on your total profits. Strategy with wider TPs or longer timeframes can work well to compensate for large spreads.

Reading Spread on Pocket Option Charts

You can see spread directly on the panel next to a chart, when you are placing a trading order. It is shown as the gap between the current bid and ask, in the MetaTrader mode. Checking it before you open a trade, because spreads can change depending on the time of day or the pair popularity.

Conclusion

The bid-ask spread is an (almost inevitable) cost paid for every trade, no matter how long you hold it for, and whether it was win or lose. It is usually wider crypto than in Forex because lower liquidity tends to widen the gap between top buyers and bottom sellers. Recognizing this, and factoring it into your timing of the trade, asset selection, and position sizing, can keep the true cost of trading lower than it would otherwise be.

Disclaimer: Trading involves risks of capital loss. This article is for educational purposes only, it doesn't constitute financial advice. Always conduct your own research before coming to any conclusions. Consider your risk tolerance before making any trading decisions.