And if you've had experience in prop trading, you know that besides having a good setup you have to consider how expensive it is for you to enter each particular position.

The answer will be straightforward – it is the spread.

A lot of prop traders can easily comprehend this theoretical concept, however, some examples from actual practice may clarify how to calculate spread in forex in practice. So let us give you an example of spread calculation in practical prop trading in the article below.

Quick refresher: what we’re actually calculating

First of all, we need to refresh our memory about the main concept in question here.

Spread is calculated as follows:

• Spread = Ask − Bid

It is a price you pay for opening a position.

If you are working in pips, then:

• Spread (pips) = (Ask − Bid) ÷ Pip Size

Having this in mind, you can evaluate more accurately the cost of entering the position. Now let us apply this formula to prop trading examples.

Example 1: EUR/USD scalp trade during London session

Let’s say you’re trading EUR/USD during the London open, one of the most active sessions.

On your chart:

• Bid: 1.08450
• Ask: 1.08452

Step 1: Calculate spread
1.08452 − 1.08450 = 0.00002

Step 2: Convert to pips
0.00002 ÷ 0.0001 = 0.2 pips

That’s a very tight spread—ideal for scalping.

Now the prop trading angle:

Assumptions will be made as follows:

• Size of lot: 2.0
• Value of pip: $20

The spread equals to 0.2 multiplied by $20 which gives a result of $4.

Even before any movement in price, you have already lost $4, but in case of a prop firm contest, it is rather good.

Example 2: GBP/USD trade during news volatility

Now, let’s change gears. In this case, you are trading on GBP/USD pair during a major economic news release.

On MT5:

• Bid: 1.27100
• Ask: 1.27160

Step 1: Spread

1.27160 – 1.27100 = 0.00060

Step 2: Pips

0.00060 / 0.0001 = 6 pips

And that’s quite a large jump from a normal condition.

Reality check:

Lot Size: 1.5

Value per pip: $15

Spread Cost = 6 x $15 = $90

For just a second, think about this situation.

You haven’t made any losing trades yet. However, you are already losing $90 before even executing the trade. Given that the stop loss level is set at 10 pips, you have utilized 60 percent of the cushion zone for risk-taking straight away.

Example 3: USD/JPY swing trade in calm market

We now consider an easier scenario – swing trading the USD/JPY pair in the Asian session.

Price: Bid 148.200 Ask 148.215

Step 1 – Spread 148.215 – 148.200 = 0.015

Step 2 – Pips (with regards to JPY pairs, 0.01 pips is equal to one pip)

0.015 ÷ 0.01 = 1.5 pips

Which is okay.

Effects on prop trading:

Size of lot: 1.0

Value of one pip: ~$10

Cost of spread = 1.5 × $10 = $15

Compare this to the swing goal of 40 to 80 pips. Clearly, the cost is minimal compared to what is gained from it.

It helps us understand why certain funded traders want to keep their trades longer than others do.

Example 4: High-frequency scalping strategy

Suppose you have a scalping program for EUR/USD with an average of 15 deals per day.

Average spread:

• 1.2 pips per trade
• Lot size: 1.0

Value per pip: $10

Total cost per deal:

• 1.2 × $10 = $12

Multiply now:

15 deals × $12 = $180 per day in spread fees

Even if you generate profits through this strategy, these fees may be enough to wipe out your earnings or put you in the red zone.

This is how most prop traders lose money, not because of poor trading strategies, but due to hidden costs of spreads.

Example 5: Comparing two prop firm conditions

Imagine you’re applying the same strategy to two separate accounts:

Account A (low spread):

• Average spread: 1.0 pips
• Trading cost per contract (1 lot): $10

Account B (high spread):

• Average spread: 3.0 pips
• Trading cost per contract (1 lot): $30

Now imagine you have:

• 10 trades a day
• Similar win ratio and trading system

Daily difference:

• Account A: Cost = $100
• Account B: Cost = $300

That’s an extra $200 per day in cost for doing the exact same thing.

That’s why many professional traders change brokers – not because of leverage or restrictions, but because of execution efficiency.

How traders actually use live spread data

And now for the part that beginning traders often overlook.

The fact is that professional prop traders not only track their spread but actually adapt their trading style to prevailing market circumstances.

How do they normally go about things?

• They trade only if their spread is below a certain level for them (for example, less than 2 pips for major pairs).
• They refrain from entering positions if the spread widens suddenly.
• They decrease position size if spreads increase.
• They skip trading if costs become too high.

A simple habit that changes everything

Ask yourself before taking part in any trade:

"How much am I paying just to enter the market?"

and immediately calculate:

• Spread in pips
• The influence of lot size
• Dollar amount

Just this one simple practice can completely transform the results you will get using a Forex Funded Account.

As soon as you begin seeing spreads as an expense, and not just a number, you will automatically become more selective when trading.

Conclusion

Calculating spread during live trading might seem like a dull exercise compared to strategy, indicators, and setups, but its importance can be seen from the previous examples:

• It influences your profitability
• It shapes your risk/reward ratio
• It helps you overcome prop challenge
• It affects your long-term trading success

Those who survive in prop firms aren't only able to make right entries; they know all the costs behind them.

In most cases, spread happens to be the very first cost for traders.