When you trade forex, the biggest cost is not a fee you see on a receipt — it is built into the price. Understanding how spreads and commissions work is the difference between choosing a broker that suits your trading style and paying far more than you need to on every single trade.
This guide explains both pricing models clearly, shows you how to calculate the real cost of any trade, and helps you decide which model is likely to save you more money based on how you trade.
Every currency pair has two prices: the bid price (the price at which you can sell) and the ask price (the price at which you can buy). The spread is the gap between them — the difference in pips.
In the example above, the spread on EUR/USD is 1.08165 − 1.08150 = 0.00015, or 1.5 pips. Every time you open a position you start at a small loss equal to the spread. The price must move in your favour by at least the spread amount before you break even.
The spread is how a market maker broker earns its revenue. No separate commission is charged. The wider the spread, the more the broker earns per trade you make.
Spreads come in two forms, and the difference matters depending on when and how often you trade.
| Feature | Fixed spread | Variable (floating) spread |
|---|---|---|
| What it is | The same spread regardless of market conditions | Spread changes based on liquidity and volatility |
| During normal hours | Usually higher than variable during quiet markets | Usually tighter — sometimes 0.1–0.3 pips on majors |
| During news events | Stays fixed — predictable cost | Can widen significantly — 5–20x normal |
| Best for | Traders who trade around news, scalpers wanting certainty | Swing traders, position traders in quiet sessions |
| Typical EUR/USD spread | 2.0–3.0 pips | 0.1–1.0 pips (normal) / up to 10+ (news) |
Some brokers — typically those using an ECN or raw-spread model — charge a separate, explicit commission per lot traded instead of (or in addition to) a spread. The spread on these accounts is typically very tight, sometimes 0.0 pips on major pairs, but the commission is charged on entry and on exit.
Commission is almost always quoted as a flat amount per standard lot (100,000 units of base currency). Common structures:
| Commission structure | Example | What you pay to open and close one standard lot |
|---|---|---|
| Per side (one-way) | $3.50 per lot per side | $3.50 to open + $3.50 to close = $7.00 total |
| Per round turn | $7.00 per lot round turn | $7.00 total charged at opening (common alternative notation) |
| Percentage-based | 0.007% per side | On a 1-lot EUR/USD position at 1.08: 0.007% × 108,000 ≈ $7.56 round turn |
To compare brokers accurately you need to add the spread cost and the commission together. Here is the formula:
You buy 1 standard lot of EUR/USD and close the trade an hour later. Which account type is cheaper?
In this example the ECN account saves $10 per standard lot. If you trade 20 lots per week that is $200 per week — or roughly $10,400 per year — just from the pricing model difference. The spread headline number alone does not tell you what you actually pay.
The answer depends on how you trade. Here is a general guide:
| Trading style | Typical lot frequency | Usually cheaper | Why |
|---|---|---|---|
| Scalping (dozens of trades/day) | Very high | ECN / raw spread | The lower per-trade cost compounds quickly at high frequency |
| Day trading (5–15 trades/day) | High | ECN / raw spread | Still volume-sensitive; commission savings outweigh convenience |
| Swing trading (few trades/week) | Low to medium | Depends on spread | Run the numbers for your specific broker's offer; can go either way |
| Position trading (few trades/month) | Very low | Standard (spread-only) | At very low frequency, zero commission simplicity may outweigh the cost difference |
| Algorithmic / high-frequency | Extremely high | ECN / raw spread | Even 0.1 pip per trade difference multiplied by thousands of trades is significant |
If you hold a position past the daily rollover (typically 17:00 New York time), you pay or receive a swap rate based on the interest rate differential between the two currencies in the pair. On highly leveraged positions held for days or weeks, swap can exceed the spread cost. Check each broker's swap table before holding overnight positions.
Many brokers charge a monthly inactivity fee (commonly $10–$15) after 12 months without a trade. If you are a casual or learning trader, check whether your broker applies this.
Most regulated EU brokers do not charge deposit fees, but some charge for withdrawals — particularly for methods like bank transfer. Bank wires can cost $15–$30 at some brokers. Check the funding page before choosing a withdrawal method.
If your account is denominated in USD but you deposit in EUR, some brokers apply a conversion spread (often 0.5–1%). Choose an account currency that matches your deposit currency to avoid this.
Some brokers advertise "0 pip spreads" but charge a commission that makes the effective spread higher than a conventional account. Always calculate the all-in cost. A 0.0 pip spread with a $10 round-turn commission on a standard lot is equivalent to a 1.0 pip spread with no commission.
Use this three-step approach to compare any two brokers on an equal basis:
Our broker comparison table includes all-in spread data for the most popular currency pairs across major EU-regulated brokers, updated regularly.
For variable spread accounts, major EU-regulated brokers typically offer EUR/USD spreads between 0.6 and 1.2 pips during the London and New York sessions. ECN/raw accounts typically show 0.0–0.2 pips on EUR/USD, with commissions of $3–$4 per side. Fixed spread accounts often sit at 1.5–3.0 pips but never widen on news events.
No. A tight spread account may also charge a commission that makes the effective cost higher than a wider-spread, commission-free account. Always calculate the total all-in cost (spread + commission per lot) rather than comparing spread headlines alone.
A pip (percentage in point) is the smallest standard price increment in a currency pair. For most pairs quoted with 4 decimal places (EUR/USD, GBP/USD), one pip = 0.0001. For JPY pairs (USD/JPY, EUR/JPY), one pip = 0.01. The pip value depends on lot size and quote currency: for a standard lot (100,000 units) of EUR/USD, one pip = $10. For a mini lot (10,000 units), one pip = $1. For a micro lot (1,000 units), one pip = $0.10.
No, there is no EU regulation that sets maximum spreads. Spreads are set commercially by each broker. However, EU-regulated brokers (CySEC, FCA, BaFin, ACPR etc.) are subject to best execution requirements under MiFID II, which means they must demonstrate that clients consistently get competitive pricing relative to the market. Brokers are required to publish their execution quality statistics.
On variable spread accounts, yes — spreads reflect live market conditions and can widen significantly during low-liquidity periods (market open/close, news events, weekends). The spread at the moment you close a position is applied, not the spread at opening. On fixed spread accounts, the spread is contractually guaranteed not to change (though some brokers include an exception clause for extreme market conditions — check the terms).
Our live comparison table shows real-time and average spread data for major pairs, so you can find the lowest all-in cost for your trading style.
View broker comparison →