Effective Spread
Costs & FeesWhat a trade actually paid to cross the market, measured from the fill against the midpoint — the one cost figure a broker cannot present selectively.
The effective spread measures what a trade actually paid to cross the market, rather than what was quoted before it. It is calculated from the fill: take the difference between the execution price and the midpoint of the bid and ask at the moment the order was sent, then double it to express the round trip on the same scale as a quoted spread.
The two numbers separate whenever execution is imperfect. An order filled at a price worse than the quote — because the market moved, because the order was larger than the top of the book, or because of a delay between click and fill — pays an effective spread wider than the screen showed. Price improvement narrows it. Because the effective spread is computed from your own fills, it is the one cost measure a broker cannot present selectively, and comparing it with the quoted spread across a few hundred trades shows whether tight quotes are actually being delivered.