Understanding Forex Spreads: Fixed vs Variable Explained

The spread is the cost you pay on every single trade. It's the difference between the price you can buy at (ask) and the price you can sell at (bid). On EUR/USD, if the bid is 1.0850 and the ask is 1.0851, the spread is 1 pip. That pip is paid by you, earned by your broker.

Understanding how spreads work, and whether fixed or variable spreads are better for your trading style, directly affects your profitability.

What Is a Forex Spread?

Every forex quote has two prices: the bid (sell price) and the ask (buy price). The spread is the gap between them. When you open a trade, you're immediately in a loss equal to the spread. You need the market to move in your favour by at least the spread amount before you break even.

Example: You buy EUR/USD at 1.0851 (the ask). The current bid is 1.0850. You're instantly 1 pip in the red. The price needs to rise to at least 1.0852 for you to break even (1 pip profit minus 1 pip spread = zero).

Spreads are measured in pips. One pip on EUR/USD is $10 per standard lot (100,000 units).

Fixed Spreads vs Variable Spreads

Fixed Spreads

Fixed spreads stay the same regardless of market conditions. If a broker quotes a fixed 2-pip spread on EUR/USD, that's what you pay whether the market is calm or volatile.

Advantages:

Predictable costs. You know exactly what each trade will cost.
No spread widening during news events.
Easier to calculate position sizing and risk.

Disadvantages:

Fixed spreads are typically wider than the best variable spreads. A broker might offer a fixed 2 pips while variable brokers average 0.10 pips.
The broker must absorb the risk of market volatility, and they price that into the fixed spread.
Fewer brokers offer truly fixed spreads in 2026. Most have moved to variable.

Who fixed spreads suit: Traders who prioritise cost predictability over cost minimisation. News traders who don't want spread spikes during announcements.

Variable (Floating) Spreads

Variable spreads fluctuate with market liquidity. During the London/New York overlap (the most liquid period), EUR/USD might trade at 0.1 pips. During the Asian session or major news events, it might widen to 3-5 pips or more.

Advantages:

Lower average spreads. The tightest variable spreads (0.0-0.2 pips on raw accounts) are much cheaper than any fixed spread.
Better reflects true market conditions.
ECN/STP brokers pass through genuine interbank pricing.

Disadvantages:

Spreads widen during low liquidity and news events.
Unpredictable costs during volatile periods.
Requires awareness of market timing.

Who variable spreads suit: Most traders, especially active ones. The lower average cost outweighs the occasional widening for the majority of trading styles.

Raw Spreads vs Standard Spreads

Within variable spreads, brokers typically offer two pricing models:

Standard Account (Spread Only)

The broker adds a markup to the raw spread. You pay a wider spread but no commission.

Example: Raw spread is 0.1 pips. Broker markup is 0.7 pips. You see a 0.8 pip spread and pay $0 commission.

Raw/ECN Account (Raw Spread + Commission)

You see the raw interbank spread and pay a separate commission per lot.

Example: Raw spread is 0.1 pips. Commission is $7 per lot. Total cost: 0.1 pips + $7 = roughly 0.8 pips equivalent.

In most cases, these end up costing about the same, give or take. But for active traders placing many trades per day, the raw spread model tends to be slightly cheaper because the commission is fixed while standard account markups can vary.

Spread Comparison Across Brokers

Here's how EUR/USD spreads compare across the brokers in our review:

| Broker | Raw Spread (Avg.) | Commission/Lot | All-In Cost | Standard Spread (Avg.) | |--------|-------------------|---------------|-------------|----------------------| | IC Markets | 0.10 pips | $6-7 | ~0.70-0.80 pips | 0.80 pips | | Pepperstone | 0.10 pips | $7 | ~0.80 pips | 1.00 pips | | FP Markets | 0.10 pips | $6 | ~0.70 pips | 1.00 pips | | Exness | 0.10 pips | $7 | ~0.80 pips | 0.30 pips | | Tickmill | 0.10 pips | $6 | ~0.70 pips | 1.60 pips | | ThinkMarkets | 0.00 pips | $7 | ~0.70 pips | 0.40 pips |

For the full low-spread broker rankings, see our Best Low Spread Forex Brokers page.

When Spreads Widen

Variable spreads are not constant. They widen during:

Low-liquidity sessions (Asian session, between session closes)
Major news releases (NFP, central bank decisions, GDP data)
Market open/close (Sunday evening rollover, Friday close)
Flash crashes or extreme volatility events

As a general rule, trade during the London/New York overlap (13:00-17:00 UTC) for the tightest spreads.

How to Minimise Spread Costs

Use a raw spread account. The all-in cost is typically lower.
Trade during liquid hours. London/New York overlap gives the tightest spreads.
Avoid trading during news events unless your strategy requires it.
Choose major pairs. EUR/USD, GBP/USD, and USD/JPY have the tightest spreads. Exotic pairs can have spreads of 20+ pips.
Compare brokers. Even among raw-spread brokers, there are differences. Use our comparison tool.

Key Takeaways

The spread is your cost per trade. Lower is better.
Variable spreads are cheaper on average than fixed spreads.
Raw spread + commission accounts are typically the best value for active traders.
Spreads widen during low liquidity and news events.
Compare total cost (spread + commission), not just the headline spread.

Read our related guides: ECN vs Market Maker Brokers and Hidden Forex Trading Fees.

Written by Neil C, BrokerAudit. Read our methodology.