What does the spread really cost?
A small gap in the rate can make a meaningful difference to what you receive.
The spread
The bid–ask spread is the difference between the prices for selling and buying a currency. A provider can earn money through that difference even when it advertises no commission. Fixed charges may apply as well.
Compare the final amount received for the same starting amount, at the same time. A reference rate is a comparison point; it is not necessarily a rate you can transact at.
Our simulator uses a percentage haircut on each exchange, plus a fixed fee in your home currency. That haircut is an assumption about execution relative to reference rates, not an exact quote of a provider’s full spread.
A round trip
Hypothetical arithmetic, before tax. The cost examples assume unchanged reference rates unless a currency move is specified.
99.75 in exchange costs. 10,000 × 0.995² = 9,900.25. The 0.5% assumption is a haircut on each leg, not a provider’s quoted full spread.
Try the example
Open this example in the simulator →Loads 10,000 with a 0.5% haircut per exchange and zero fixed fees. The simulator uses actual currency history, so its result will differ from an unchanged-rate example. It models cash, not the return on an asset.
Sources and editorial notes
SEC · Forex investor bulletin (PDF). Vanguard explains fund share-class hedging.
Prepared with AI assistance and source references. No independent professional financial review is claimed. How this site is produced · Report a correction.