When you trade a financial instrument, such as a Stock, ETF, FX, or CFD, there are always two prices: Bid and Ask.
Bid price = the price you can sell at right now
- This is the highest price buyers in the market are currently willing to pay.
- If you place a market sell order, you will sell at (or very close to) the current bid (subject to the available size on the bid).
Ask price (offer) = the price you can buy at right now
- This is the lowest price sellers in the market are currently willing to accept.
- If you place a market buy order, you will buy at (or very close to) the current ask (subject to the available size on the ask).
The spread is the difference between the bid and ask:
- Spread = Ask − Bid
- This gap is a trading cost to you: Buy at ask → sell immediately at bid → you lose roughly the spread.
Is the spread a direct fee charged by Saxo?
The spread is not a separate fee charged by Saxo, and it is not deducted from your account as an extra cost.
Instead, for most instruments, the spread is an implicit trading cost built into the market prices (the difference between buy and sell prices), rather than a standalone fee you see on your statement.
How important is spread to you?
It mostly depends on if you are doing long-term investing or short-term trading.
Long‑term investing
If you:
- Buy and hold for months or years
- Trade infrequently
Spread is less important, but not irrelevant.
If you hold for years, the spread is usually tiny compared with long‑term price movement and dividends you would get. Paying a small spread on a blue‑chip stock is minor if you expect the stock to move dollars over time.
What to focus on:
- Choose liquid, well‑traded stocks or ETFs (they usually have tight spreads anyway).
- Use limit orders to avoid very bad fills, especially when spread is wide:
- In volatile markets
- At the open or in after‑hours trading
Short‑term trading
If you:
- Day trading, swing trading, scalping
- Enter and exit frequently, sometimes multiple times a day
Spread is very important.
The spread is a direct, recurring cost on every trade:
- Buy at ask, sell at bid → you “pay” the spread each round trip.
- If your profit target is small (e.g., 10–20 cents), a 5–10 cent spread can eat a big percentage of your potential profit.
What to focus on:
- Trade high‑liquidity names with tight spreads (often large caps, major ETFs).
- Be very deliberate with order types:
- Use limit orders to control entry/exit price.
- Avoid using market orders in stocks with wide or unstable spreads.
- Size your positions knowing that wide spreads increase slippage and risk.
Read more: Order types