Broker spread: what is it and how to calculate it in 2026

What is the spread in trading?

The spread is the gap between two prices displayed simultaneously for the same financial instrument: the bid price (sell price, at which the broker buys) and the ask price (buy price, at which the broker sells). The trader always buys at the ask price and sells at the bid price.

For example, if EUR/USD shows a bid of 1.08500 and an ask of 1.08515, the spread is 1.5 pips (0.00015). This means that as soon as you open a position, you are immediately at a loss equal to the spread amount. The market must move at least 1.5 pips in your favour before your position becomes profitable.

The spread is the primary revenue source for brokers that do not charge a fixed commission per trade. Even brokers that charge a commission typically display a residual (very small) spread in addition to the commission.

Understanding the spread is essential because it directly impacts your trading profitability. A trader making 10 trades per day on EUR/USD with a 1.5 pip spread pays the equivalent of 15 pips per day in spread costs. On a standard lot, that represents approximately $150 per day in trading costs.

Fixed spread vs variable spread

There are two main types of spreads offered by brokers: fixed spreads and variable (floating) spreads. Each has specific advantages and drawbacks.

Fixed spread. The spread remains constant regardless of market volatility or liquidity conditions. If your broker shows a fixed 2-pip spread on EUR/USD, you always pay 2 pips, whether during a calm session or a major ECB announcement. The main advantage is cost predictability. The drawback is that fixed spreads are generally higher than variable spreads in normal conditions, as the broker builds in a safety margin to cover high-volatility periods.

Variable spread. The spread fluctuates in real time based on supply and demand, available liquidity, and volatility. In normal conditions, a variable EUR/USD spread can drop to 0.1-0.5 pips, well below fixed spreads. But during major economic announcements (NFP, Fed rate decisions), the spread can suddenly widen to 5, 10, or even 20 pips for a few seconds.

Most modern brokers, including RaiseFX, offer variable spreads on the MT5 platform. This model provides the best prices in normal market conditions and accurately reflects real interbank market conditions.

How to calculate spread cost

The spread cost depends on three factors: the spread in pips, the size of your position (in lots), and the pip value for the pair in question.

If your broker also charges a commission (e.g., $7 per round-turn lot), the total trading cost is the sum of the spread and the commission. On a Raw/ECN account with 0.2 pip spread and $7 commission per lot, the total cost is: (0.2 x 10) + 7 = $9 per round-turn lot. This is often cheaper than a standard account with 1.5 pip spread and no commission ($15 per lot).

Typical spreads on major pairs

Spreads vary considerably between currency pairs. Major pairs, which benefit from the highest liquidity, generally offer the lowest spreads.

The spreads shown above are averages during normal market conditions (London and New York sessions). Spreads naturally widen outside peak trading hours (Asian session for European pairs) and during high-volatility events.

A spread above 2 pips on EUR/USD is considered high in 2026. The best brokers regularly offer spreads below 1 pip on standard accounts and below 0.5 pip on Raw/ECN accounts.

How to compare brokers by spread

A broker's advertised spread is not enough to evaluate the real cost of trading. Here are the criteria to consider for a meaningful comparison.

1. Total trading cost. Add the average spread and the per-lot commission. A broker with 0.3 pip spread + $7 commission (total cost: $10) is cheaper than a broker with 1.5 pip spread and no commission (total cost: $15).

2. Average spread vs minimum spread. Brokers often advertise the minimum spread ("from 0.0 pips"). This figure is misleading because the minimum spread only occurs for a few seconds per day. Compare 24-hour average spreads, which some brokers publish in their statistics.

3. Spreads during events. Check or test spreads during major economic announcements. A broker with an average spread of 0.8 pip that widens to 20 pips during NFP can be expensive if you trade news events.

4. Slippage. Slippage is the gap between the requested price and the actual execution price. A broker with very low spreads but high slippage may cost more than a broker with slightly higher spreads but precise execution.

5. Spreads on your pairs. A broker may have excellent EUR/USD spreads but high spreads on the pairs you trade most. Check spreads on your usual instruments before choosing.

Frequently asked questions