Why do I pay a spread if my broker is "commission-free"?

Because the spread is not a broker fee but a market cost — and at free brokers it is often part of the revenue model too. Every trade pays it, at every broker.

When is the spread widest?

In illiquid assets, in the first and last hours of the session, outside the underlying market's hours and in high-volatility episodes.

How does the spread affect dividend investors?

Little, and that is the good news: a buy-and-hold strategy pays it rarely. It matters most when choosing ETFs (high volume = tight spread) and when trading mid and small caps, where limit orders should always be used.

Spread | Wiki Por Dividendos

The spread is the difference between the price at which you can buy an asset (ask) and the price at which you can sell it (bid) at a given moment. It is investing's most silent cost: it never shows up as a fee on any statement, but you pay it on every trade.

Spread (%) = (Ask − Bid) / Mid price × 100

If a stock quotes €99.90 (bid) / €100.10 (ask), the spread is €0.20 — 0.2%. You buy at €100.10 and, if you sold that very instant, you would receive €99.90: you lose the full spread just by going in and out.

What it depends on

Liquidity: the more an asset trades, the tighter its spread. Large caps and high-volume ETFs have spreads of hundredths; a small cap can carry 1–2%.
Time of day: in the least active hours (open, close, after-hours) spreads widen. On a UCITS ETF, trading while the underlying market is closed (a US-equity ETF in the European morning, say) makes the spread more expensive.

Spread

What it depends on

The "commission-free" model

How to minimise it

Frequently asked questions