Glossary
Spread
The difference between the ask (buy) price and the bid (sell) price. Every round trip pays it once, before the market has moved at all.
The spread is the gap between the ask, at which you buy, and the bid, at which you sell. A round trip crosses it once: a position bought at the ask is closed at the bid. Spreads widen around data releases, at the daily rollover and in thin trading hours.
Example
Gold is quoted at 4,000.10 bid and 4,000.40 ask. The spread is 0.30 USD per ounce, or 3 pips in our ledger. Relative to price it is 0.30 ÷ 4,000 = 0.000075, or 0.75 bp. If you buy and sell straight away, you lose 0.30 USD per ounce without any change in the market.
Why it matters
Short-term strategies make small amounts per trade, so the spread can absorb most of the edge. Our lab measures the spread from real broker quotes, hour by hour, instead of assuming a fixed figure.