The bid-ask spread is the gap between the price at which you can buy an instrument and the price at which you can sell it at the same instant. It is not a commission added afterward: it is a cost built into the price itself, present before the position moves by a single cent.
What the SEC and CME Group call bid and ask
The United States securities regulator defines the spread as the difference between the highest price a market maker is willing to pay to buy a security (the bid) and the lowest price at which it is willing to sell it (the ask), in an over-the-counter market (SEC, definition of Spread).
CME Group, which runs order-book markets for futures contracts, uses a more neutral definition, without reference to a single market maker: the bid/ask spread is simply the price gap between the bid price and the ask price (CME Group, Glossary). The nuance matters: on an organized market, the gap results from many orders meeting in a public order book; on an over-the-counter market such as Forex or CFDs, it reflects the price the liquidity provider is quoting at that exact moment.
The AMF’s worked example on CFDs
The French financial markets authority illustrates this cost with a concrete example: a CFD can be bought at 101 euros and sold at 99 euros at the same instant. This two-euro gap constitutes the cost borne by the client, separate from the commission that applies in addition on equity CFDs (AMF, Les CFD (contracts for difference)).
In practice, if you open and immediately close a position on that instrument, with no market movement in between, you lose those two euros per unit. The spread is therefore paid at entry, before any favorable or unfavorable price move. It is a structural cost, not a matter of chance.
Why the spread varies by instrument
Interactive Brokers ties the size of the spread to the liquidity of the asset in question. On a highly liquid asset, such as a large-cap stock or a major currency pair, the spread is typically narrow. On an illiquid or volatile asset, it can be significantly wider (IBKR Campus, Bid-Ask Spread).
This link to liquidity explains why a pair such as EUR/USD generally shows a tighter gap than an exotic pair or a less-traded index: the more buyers and sellers active at a given moment, the more their prices tend to converge. Conversely, outside periods of heavy activity, or on a thinly traded instrument, the gap can widen without any announcement explaining it.
What this gap does not tell you
The sources used here define the mechanism and give an illustrative order of magnitude, not a rule about frequency or amplitude that generalizes to every instrument or every hour. None of the definitions cited state how often a spread widens in practice or by how much, since those values depend on the liquidity provider and the moment considered. Checking the spread conditions specific to each instrument with the broker therefore remains necessary before assessing the real cost of a strategy.
On a challenge account, this cost adds to that of overnight CFD financing when a position is held past a single day, and it interacts differently depending on whether the order placed is a limit order or a stop order, the first setting a maximum buy price or minimum sell price, the second triggering a market order once a threshold is reached.
To place this cost within the broader set of rules applied on a funded account, the comparison of single-step prop firm programmes details the rules of several offers side by side.