How to Use the Spread Indicator in MT4 & MT5

What Is a Spread in Forex

The spread is the difference between the bid price (sell) and the ask price (buy) of a currency pair, measured in pips. It’s your direct cost of entering a trade. For example, if EUR/USD shows 1.08500 / 1.08503, the spread is 0.3 pips.

When you open a trade, you immediately start at a small “loss” equal to the spread because you bought at the ask price but would only sell at the lower bid price. To break even, the market needs to move in your favor by at least the size of the spread.

This is why understanding the spread is so critical, it is your first and most immediate cost of trading.

• Bid Price: the price at which the market (or your broker) will buy the base currency from you. This is the price you get when you sell.
• Ask Price: the price at which the market will sell the base currency to you. This is the price you pay when you buy.

How to Use the Spread Indicator in MT4

The spread indicator in MT4 displays the live bid/ask difference directly on your chart, so you can monitor your trading costs tick by tick before committing to any position.

Installing the Indicator

Download a .ex4 spread indicator file from your broker’s resource library or a trusted trading site. Open MT4, go to File → Open Data Folder → MQL4 → Indicators, paste the file in, then restart the platform.

Applying It to Your Chart

Open the Navigator panel, expand the Indicators section, locate the spread indicator, and drag it onto your chart. A settings window will appear where you can adjust the display color, font size, and on-screen position. Click OK and the live spread value will appear on your chart, updating in real time.

Reading the Values

The indicator displays a number in pips. During normal London or New York session hours on major pairs like EUR/USD, you should see spreads between 0.1 – 1.5 pips. If the number spikes above 3.0 pips, it typically signals a news event or low liquidity window, a signal to hold off on entering a trade.

Best Practices

Place the indicator in a corner that doesn’t obstruct your price action, top-right or bottom-left works well. Pair it with a session indicator to quickly identify the lowest-spread trading windows throughout the day.

How to Use the Spread Indicator in MT5

MT5 offers more built-in spread visibility than MT4, giving traders two ways to monitor live spreads, directly in the platform without needing a custom indicator.

Method 1: Market Watch Spread Column

Right-click any symbol in the Market Watch panel → Columns → Spread. This adds a live spread column across all your instruments at once, ideal for quickly comparing costs before deciding which pair to trade.

Method 2: Custom Indicator on Chart

For traders who want the spread visible directly on their chart, download a .ex5 spread indicator file, go to File → Open Data Folder → MQL5 → Indicators, paste the file in, and restart MT5. Then open the Navigator panel, find the indicator, and drag it onto your chart. The live spread value will appear and update tick by tick.

Reading the Values

Just like MT4, the number displayed is in pips. On major pairs during peak session hours, a spread of 0.1 – 1.5 pips is considered healthy. A sudden spike above 3.0 pips typically points to a news release, market open, or low-liquidity period, all situations where it’s worth waiting before entering.

Why MT5 Has an Edge

MT5’s built-in spread column means you can monitor spreads across multiple instruments simultaneously without installing anything extra, a clear advantage for traders who switch between forex pairs, indices, and commodities throughout the session.

How Is the Forex Spread Measured?

The spread is almost always measured in pips. A pip (percentage in point) is typically the fourth decimal place of a currency pair’s price.

Currency Pair	Bid	Ask	Spread
EUR/USD	1.08500	1.08503	0.3 pips
GBP/USD	1.27200	1.27208	0.8 pips
USD/JPY	149.500	149.510	1.0 pip
USD/TRY	32.100	32.160	6.0 pips

As you can see, major currency pairs like EUR/USD and GBP/USD tend to have very tight spreads due to high liquidity, while exotic pairs like USD/TRY carry significantly wider spreads.

What Affects the Size of the Forex Spread?

The spread is never fixed to a single value, it moves constantly based on real market conditions. Here are the key factors that determine how wide or tight a spread is at any given moment.

Market Liquidity

The more buyers and sellers active in the market, the tighter the spread. This is why the EUR/USD, the world’s most traded currency pair, consistently carries one of the lowest spreads available. Less popular exotic pairs have far fewer participants, resulting in wider spreads.

Trading Sessions

Forex operates 24 hours a day across four major sessions: Sydney, Tokyo, London, and New York. Spreads are generally tightest during the London and New York sessions, particularly during the overlap (8 AM – 12 PM EST), when global trading volume peaks. Conversely, spreads tend to widen during off-peak hours, such as the late New York session or early Asian session, when fewer participants are active.

Market Volatility & News Events

Major economic announcements such as Non-Farm Payrolls (NFP), inflation data (CPI), or central bank interest rate decisions, cause sudden spikes in volatility. During these periods, spreads can widen dramatically, sometimes 5 to 10 times their normal size, within seconds.

Broker Type & Business Model

Your broker’s pricing model plays a significant role:

• Market Makers set their own bid/ask prices and profit directly from the spread.
• ECN/STP Brokers pass interbank spreads to clients and charge a small commission instead.

Spread Cost Calculator

Want to calculate exactly how much a spread costs you in real money?

Use this simple formula: Spread Cost = Spread (in pips) × Pip Value × Number of Lots

Example:

• EUR/USD spread: 0.5 pips
• Pip value (1 standard lot): $10
• Trade size: 1 lot

Cost = 0.5 × $10 × 1 = $5.00 per trade

On a mini lot (0.1 lot), that same trade would cost just $0.50. This is why position sizing matters and why traders on smaller accounts benefit from choosing brokers with the tightest possible spreads.

Fixed vs. Variable Spread: Which Is Better?

Fixed spread is better for beginners. It stays constant regardless of market conditions, no surprise spikes during news events, no fluctuating costs, just predictable pricing on every trade. Ideal if you’re still building your strategy and want full control over your trading costs.

Variable spread is better for experienced traders. It moves with the market dropping as low as 0.0 pips during peak liquidity hours, but widening sharply during major news events. Scalpers and day traders who know how to time the market can benefit most from these tight windows.

Feature	Fixed Spread	Variable Spread
Consistency	Always the same	Changes with market
Cost during calm markets	Slightly higher	Can be very tight
Cost during news events	Stays fixed	Can spike sharply
Best for	Beginners, news traders	Scalpers, experienced traders

Conclusion

Understanding the spread is not just a beginner’s lesson, it’s a fundamental part of trading smart at every level. From knowing the difference between bid and ask, to reading a live spread indicator on your chart, every pip you save on trading costs is a pip that stays in your account.

Whether you’re scalping tight setups on EUR/USD or swing trading across multiple instruments, keeping a close eye on your spread helps you enter at the right time, avoid unnecessary costs, and make more informed decisions on every single trade.

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