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Everything you need to know about forex spreads — what they are, how they affect your trading costs, and how to find the lowest spread brokers in 2026.
The spread is the difference between the bid price (what you can sell at) and the ask price (what you can buy at) for a currency pair. It is the primary cost you pay every time you open a trade, and it is measured in pips — the fourth decimal place of a currency pair's price.
For example, if EUR/USD is quoted as Bid: 1.08500 / Ask: 1.08506, the spread is 0.6 pips. When you click "Buy," you instantly pay this 0.6 pip cost to the broker. The trade only becomes profitable once the price moves in your favor by more than the spread amount.
You buy 1 standard lot (100,000 units) of EUR/USD with a 1.0 pip spread. Each pip = $10 on a standard lot. Your immediate cost is $10 before the market even moves. On a Raw ECN account with a 0.1 pip spread, that same trade costs only $1 in spread — plus a ~$7 commission, totaling $8. The raw ECN wins at high volume.
Forex brokers offer two fundamental spread types: fixed and variable. Understanding the difference is critical for choosing the right account for your trading style.
Most professional and active traders prefer variable spreads because during peak liquidity hours (8am–12pm GMT, when London and New York sessions overlap), EUR/USD spreads on Raw ECN accounts regularly sit at 0.0–0.1 pips. The catch is that you pay a separate commission, which averages $3.50 per side ($7 round-trip per standard lot) at brokers like IC Markets.
The account type you choose determines how your broker earns money — and therefore how much you pay per trade. There are two dominant models in 2026:
Standard Accounts are the most common account type. The broker adds a markup to the interbank spread and passes that wider spread to you. There is no separate commission. A standard EUR/USD spread at a competitive broker is typically 0.6–1.2 pips. This model is simple and transparent for casual traders who make a small number of trades per week.
Raw ECN / STP Accounts pass the raw interbank spread directly to the trader with little to no markup — often 0.0 pips on EUR/USD. Instead, the broker charges a flat commission per lot traded. The math favors active traders: at IC Markets, a Raw ECN account charges $3.50 per side. If you trade EUR/USD on a standard account at 0.8 pip spread, that's $8 per lot in spread cost. On Raw ECN, you pay ~$0 in spread + $7 commission = $7 total. Small savings per trade, but massive at scale.
If you trade fewer than 20 lots per month, a standard account is likely simpler with no commissions to track. If you trade 20+ lots per month or use scalping/EA strategies, a Raw ECN account will materially lower your total trading cost. Always calculate: (spread × pip value) + commission per round trip.
The spread is not just a minor friction cost — at scale, it is one of the largest expenses in trading. Every time you enter a position, you start that trade in a negative P&L equal to the spread. The market must move in your favor by at least the spread width before you break even.
Consider a trader who makes 10 trades per day on EUR/USD standard lots. With a 1.0 pip spread ($10 per trade), they pay $100 per day in spread costs alone — $2,200 per month assuming 22 trading days. The same trader on a 0.1 pip Raw ECN account with $7 commission pays $8 per trade — only $80 per day or $1,760/month. That's a $440/month difference, or $5,280 per year, just from choosing a tighter spread account.
For scalpers targeting 5–10 pip moves, the spread matters even more. If your target is 8 pips and your spread is 1.5 pips, your effective target is only 6.5 pips — a 19% reduction in potential profit. This is why scalpers almost exclusively use Raw ECN accounts with the tightest possible spreads.
Spreads are directly tied to liquidity. The more a currency pair is traded globally, the tighter its spread. Major pairs involving USD, EUR, GBP, and JPY consistently carry the lowest spreads. Here's a reference table of typical spreads at competitive brokers in 2026:
| Pair | Type | Raw ECN (pips) | Standard (pips) | Notes |
|---|---|---|---|---|
| EUR/USD | Major | 0.0 | 0.6–1.0 | Tightest spreads, most liquid pair |
| GBP/USD | Major | 0.2 | 0.9–1.5 | High volatility, tight spread |
| USD/JPY | Major | 0.1 | 0.7–1.2 | Very liquid, low spreads |
| AUD/USD | Major | 0.2 | 0.8–1.4 | Commodity-linked pair |
| USD/CAD | Major | 0.3 | 1.0–1.8 | Oil-correlated pair |
| EUR/GBP | Cross | 0.5 | 1.2–2.0 | Less liquid cross pair |
| USD/TRY | Exotic | 12.0 | 20–40 | High risk, very wide spreads |
⚠️ Spreads shown are typical during London/New York session overlap (peak liquidity). Spreads will be wider during Asian session hours and significantly wider during major news events.
After testing spreads across dozens of brokers, IC Markets and Pepperstone consistently rank as the lowest-cost options for retail traders in 2026. Both offer genuine Raw ECN pricing, institutional-grade liquidity, and are regulated by ASIC and other top-tier authorities.
IC Markets is widely recognized as the gold standard for low-spread forex trading. Their Raw cTrader account offers EUR/USD spreads averaging 0.02 pips with $3.50/side commission. ASIC and CySEC regulated. Over 180,000 active clients.
Pepperstone combines ultra-tight Razor account spreads with world-class regulation (FCA, ASIC, DFSA). Average EUR/USD spread of 0.09 pips on their Razor account. Excellent platform choice (MT4, MT5, cTrader) and outstanding execution speeds.
IC Markets and Pepperstone are the two tightest-spread brokers available to retail traders. Both offer Raw ECN accounts, $200 minimum deposit, and are regulated by ASIC.
Common questions about forex spreads, costs, and ECN accounts.
This guide was written by the forex.mobile editorial team in March 2026. Spread data was verified by opening live accounts at each broker and measuring actual spreads during London/New York session overlap. Brokers cannot pay for higher ratings. Affiliate relationships do not influence our content or rankings.
Our top-rated brokers for this topic, independently reviewed.