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Risk warning: CFDs are complex instruments. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. EU leverage is capped at 30:1 for major forex pairs under ESMA rules.
What is a spread?
A spread is the difference between the price you can buy a currency pair (the ask) and the price you can sell it (the bid). It is the primary cost of every forex trade you make — and it applies the moment you open a position.
Example: if EUR/USD has a bid of 1.08500 and an ask of 1.08515, the spread is 1.5 pips (0.00015). On a standard lot (100,000 EUR), that is a €15 cost to enter the trade. On a micro lot (1,000 EUR), it is €0.15.
Why the spread matters more for small accounts: When you are trading with €200 and risking 2% per trade (€4), a variable spread spike from 0.5 to 5 pips can consume your entire risk budget before the trade even moves. Spread management is not optional when your margin is thin.
All EU-regulated brokers must display their spreads clearly before you trade, under MiFID II best execution requirements. If a broker hides its spread or only shows it after you fund an account, that is a compliance red flag.
How fixed spreads work
A fixed spread stays constant regardless of market conditions. If a broker quotes you a 1.5 pip fixed spread on EUR/USD, you pay 1.5 pips at 3 AM on a Sunday and at 8:30 AM New York time during a US jobs report. Same cost, every time.
Spread type
Fixed
+Predictable cost — no surprises during news
+Easier to calculate risk before entering
+Works 24 hours regardless of session
+Better for learning — one variable removed
−Wider than best variable spreads in liquid markets
−Less efficient for high-frequency scalping
−Broker carries more market-making risk
Spread type
Variable
+Can be very tight during liquid sessions (0.1–0.3 pips)
+Better for scalpers and high-frequency traders
+Reflects true market conditions in real time
−Spikes to 5–10+ pips during news events
−Widens sharply on Fridays and overnight sessions
−Harder to plan risk when cost is unpredictable
−Can trigger stop-loss prematurely during spikes
Fixed spreads are typically offered by market-maker brokers. The broker quotes you a set price and takes the other side of your trade. In exchange for the stability guarantee, the fixed spread is usually slightly wider than the variable spread during the best market conditions.
Typical fixed spreads on major pairs (EU regulated brokers)
- EUR/USD: 1.3–2.0 pips fixed
- GBP/USD: 2.0–3.0 pips fixed
- USD/JPY: 1.5–2.5 pips fixed
- EUR/GBP: 1.8–3.0 pips fixed
How variable spreads work
Variable spreads (also called floating spreads or ECN spreads) move in real time based on market liquidity. During the London-New York session overlap (1 PM–5 PM CET), EUR/USD variable spreads can drop to 0.1–0.3 pips. During overnight Asian hours, they widen to 0.8–1.5 pips. During major economic news, they can spike to 5–15 pips or more for a brief window.
Most ECN/STP brokers operating in the EU use variable spreads. The broker routes your order directly to its liquidity providers (banks, institutional desks) and passes the market spread to you, plus a small commission per trade.
Variable spread spikes during news events: US Non-Farm Payrolls, ECB rate decisions, CPI prints, and FOMC meetings regularly cause EUR/USD spreads to widen from 0.3 pips to 5+ pips for 1–3 minutes. If you have an open position during these windows and your stop-loss is close, the spike can close it even if price did not actually reach your target level. This is a significant risk for beginners.
When variable spreads are cheapest
- London open (8–9 AM CET): Spreads tighten as European volume enters
- London-New York overlap (1–5 PM CET): Maximum liquidity, tightest spreads of the day
- Mid-week (Tuesday–Thursday): Most consistent spread conditions
When variable spreads widen most
- 00:00–06:00 CET (overnight): Low liquidity, spreads widen 2–5x normal
- Friday afternoon after 5 PM CET: Weekend risk-off widening
- Major news releases: 5–15 pip spikes for 1–3 minutes
- Monday market open: Gap risk and weekend pricing uncertainty
Fixed vs variable: side-by-side comparison
| Factor |
Fixed spread |
Variable spread |
Winner (small accounts) |
| Typical EUR/USD cost |
1.3–2.0 pips |
0.1–1.5 pips (varies) |
Variable (in ideal conditions) |
| EUR/USD during news |
Still 1.3–2.0 pips |
5–15 pips |
Fixed |
| Risk calculation accuracy |
Exact — you know the cost upfront |
Approximate — varies by time and day |
Fixed |
| Best for beginners |
Yes — one less variable to manage |
Harder — requires timing awareness |
Fixed |
| Best for scalpers |
No — too wide for frequent trades |
Yes — low cost in peak hours |
Variable |
| Overnight holding cost |
Spread stays same (+ swap fee) |
Spread widens overnight (+ swap fee) |
Fixed |
| Weekend and holiday risk |
Protected — spread stays fixed |
Can gap widely on Monday open |
Fixed |
| Commission charges |
Usually none (built into spread) |
Often +$3–$7 per lot commission |
Fixed (for micro lots) |
| MiFID II transparency |
Easily quoted, fully disclosed |
Must show range; actual varies |
Both compliant |
Which is better for small EU accounts?
For accounts under €500, fixed spreads win in almost every scenario. Here is why.
When you have €200 and use the recommended 1–2% risk per trade (€2–€4), a variable spread spike destroys your risk/reward ratio before the trade even begins. On a micro lot position (1,000 EUR), a 5-pip spike costs €0.50 — that is 25% of your €2 risk budget, in spread alone.
The CompareFX verdict for small accounts
✅Use fixed spreads if your account is under €500, you trade 1–5 times per week, or you are still learning risk management.
✅Use variable spreads once your account exceeds €2,000, you trade during the London-New York overlap consistently, and you never hold through news events.
⚠️Both model types are fully compliant with ESMA/MiFID II. The choice affects cost, not regulatory protection.
This is educational information only, not personal financial advice. Always assess your own risk tolerance before trading.
Real cost comparison: €200 account, 5 trades per week
| Scenario |
Fixed spread (1.5 pips) |
Variable spread (average) |
| Normal market conditions (micro lot) |
€0.15 per trade |
€0.05–€0.12 per trade |
| During news event (micro lot) |
€0.15 per trade |
€0.50–€1.50 per trade |
| Weekly cost (5 trades, mixed conditions) |
€0.75 (predictable) |
€0.50–€3.50 (unpredictable) |
| Worst-case weekly (2 trades hit news) |
€0.75 |
€3.50+ (could be 1.75% of account) |
Practical tip for beginners: Open a demo account on both a fixed spread broker (AvaTrade) and a variable spread broker (Exness) and trade the same 10 setups on both over two weeks. Calculate your total spread costs on each. You will see the difference in real numbers — especially if any news events occur during your demo session.
EU regulated brokers offering each model
The brokers below are regulated by EU or UK regulators with EU passporting. All are CySEC, BaFin, FCA, or equivalent licensed. None are recommended for speculative purposes — use this comparison for educational reference.
AvaTrade
Fixed spreads · CySEC + MiFID II
EUR/USD: 0.9 pips fixed · Min deposit: €100 · Commission: None on standard account
One of the most prominent EU fixed-spread brokers. Strong educational materials for beginners. Regulated in Ireland (Central Bank of Ireland, MiFID II) and Cyprus (CySEC). Well-suited to small accounts that want cost predictability.
Open AvaTrade demo →
Exness
Variable spreads · CySEC regulated
EUR/USD: 0.1–1.0 pips variable · Min deposit: €1 · Commission: $3.50 per lot on Standard+
Low entry point and very tight spreads during peak hours. Variable model means careful timing is needed. CySEC regulated. Best for traders comfortable with ECN-style execution who trade primarily in peak London-New York hours.
Open Exness demo →
Note on broker comparisons: Spread conditions quoted are indicative and typical. Live spreads vary by account type, funding level, and market session. Always verify current spread schedules on the broker's official website before funding an account. Past spread conditions do not guarantee future conditions.
Frequently asked questions
What is the difference between a fixed and variable spread?
A fixed spread stays the same regardless of market conditions — for example, always 1.5 pips on EUR/USD. A variable spread changes in real time based on market liquidity and volatility. Variable spreads can be as low as 0.1 pips during busy sessions but can spike to 5+ pips during major news events or thin overnight markets.
Which spread type is better for a small account under €500?
Fixed spreads are generally better for small accounts. When you only have €200 in your account, a variable spread spike from 0.3 pips to 5 pips on a news release can cost more than 2% of your capital in a single trade entry. Fixed spreads give you predictable, manageable costs — essential when you are learning and capital preservation matters most.
Do EU-regulated brokers have to display spreads clearly?
Yes. Under MiFID II and ESMA's best execution requirements, all EU-regulated brokers must display their spreads clearly in their trading platforms and pre-trade order screens. They must also disclose all costs including spread, commission, and overnight swap charges before you trade. If a broker hides its spreads or only shows them after you fund an account, treat that as a compliance red flag and choose a different broker.
Can I trade profitably with variable spreads as a beginner?
It is possible but harder. Variable spreads require you to time your entries carefully, avoid trading around major news events, and understand how spreads widen during volatility. Beginners who trade at random times — including during US Non-Farm Payroll releases or ECB meetings — often get caught by spreads that spike to 10x their normal level. Fixed spreads remove this variable, which is one less thing to manage while you are learning.
Which EU-regulated brokers offer fixed spreads?
AvaTrade is the most prominent EU-regulated broker offering fixed spreads on its standard account (from 0.9 pips on EUR/USD). Most other major EU brokers — including Exness and XM — use variable spreads on their ECN/STP accounts, though some offer a separate fixed-spread account type aimed specifically at beginners. Always check the account type you are opening, not just the broker's headline spread.
Important notice: Forex and CFD trading carries a high level of risk and may not be suitable for all investors. The information on this page is educational and for general information purposes only. It does not constitute personal financial, investment, or trading advice. Past performance is not indicative of future results. Leverage of up to 30:1 is available for major forex pairs under ESMA rules for EU retail clients. Please ensure you fully understand the risks involved and seek independent advice if necessary.