Every trade you make on a currency pair has an invisible cost baked into it: the spread. Brokers advertise "spreads from 0.0 pips" the way airlines advertise "flights from $9" — technically true, practically misleading. This article explains what the spread actually is, how it's structured across different account types, and the arithmetic that tells you what you're really paying.
The short answer
The spread is the difference between the price at which you can buy (the ask) and the price at which you can sell (the bid) a currency pair at any given instant.
If EUR/USD shows bid 1.0850 / ask 1.0851, the spread is 1 pip. You pay that pip immediately on entry: a market buy fills at 1.0851, and if you immediately reversed and sold, you'd fill at 1.0850 — down one pip, the broker's fee baked into the execution.
There is no commission on a trade with a bigger spread; the spread is the commission. On "Raw" or "ECN" accounts, the spread is tight (sometimes 0.0 pips on majors), but you pay an explicit commission per trade instead.
Why spreads exist
In traditional markets, the spread covers three things:
- Market-maker risk — whoever is quoting both sides has to hold inventory and may lose money if price moves.
- Liquidity premium — less-liquid instruments have wider spreads because the quoting party bears more risk.
- Profit margin — the market maker has to make money.
On retail FX, the broker is either re-quoting spreads from their liquidity providers (ECN model) or quoting their own (market-maker model). In both cases, the spread is your cost of transacting.
Fixed vs variable spreads
Variable (floating) spreads are the norm. They widen when liquidity thins — around the New York close (22:00 UTC), during major news releases, during thin Asian-session hours on exotic pairs. EUR/USD might be 0.3 pips during London overlap and 3–4 pips during 2am Tokyo.
Fixed spreads exist on some market-maker accounts. The broker commits to a constant spread — e.g. 2 pips on EUR/USD at all times. This is convenient for beginners but expensive; you're paying a premium for the predictability, and the broker profits when real spreads tighten below the fixed number.
For serious trading, variable spreads on an ECN or Raw account are standard. Every prop firm worth considering uses one.
The "Raw" / "ECN" / "Standard" nomenclature
Retail brokers typically offer two or three account tiers:
| Account type | Spread | Commission | Best for |
|---|---|---|---|
| Standard | ~1.0–1.8 pips on EUR/USD | $0 | Beginners, small accounts |
| Raw / ECN | 0.0–0.3 pips on EUR/USD | ~$3.50 per side per lot | Active traders, EAs, scalpers |
| Prime | Institutional spreads | Lower commission | High-volume / professional |
The total cost per round trip is what matters:
- Standard EUR/USD: ~1.3 pips × $10/pip = $13 per standard lot round trip.
- Raw EUR/USD: 0.1 pip × $10 + $7 commission = $8 per standard lot round trip.
Raw accounts save you roughly $5 per standard lot. On low-volume accounts the difference is small; on high-volume EAs or prop-firm challenges, it compounds meaningfully.
How to read spreads on MT5
Open MT5's Market Watch panel (Ctrl+M). Right-click → Symbols → add the Spread column. Values are shown in points, not pips, by default.
A spread of 8 on EUR/USD means 0.8 pips. A spread of 180 on XAUUSD (gold) means 1.80 USD at the quote price. The unit is always "one point of the quoted price" — which, as covered in the pip article, is one tenth of a pip on 5-decimal FX pairs.
The only reliable way to compare brokers is to run both on demo during the same hour and screenshot the spread. Marketing numbers are averages at best, cherry-picked at worst.
The "from 0.0 pips" trick
Every ECN broker advertises minimum spreads. "From 0.0 pips" on EUR/USD is literally true — for perhaps 1% of the trading week, during peak London-NY overlap, on a subset of broker-liquidity-provider combinations.
The average spread matters far more. Look for published data:
- Typical spread — the marketing number, averaged in a favorable way.
- Average spread — usually the geometric mean across the full session.
- Median spread — the best comparison number if the broker publishes it.
Good brokers publish live spread stats on their website, refreshed daily. IC Markets, Pepperstone, and Vantage all do this. Brokers that don't publish — or that publish only "typical" numbers — are hiding something.
When spreads widen unexpectedly
Expect spreads to widen sharply around:
- Major news releases (NFP, FOMC, ECB, CPI). EUR/USD can go from 0.3 to 15 pips for several seconds.
- Session rollovers. 22:00 UTC globally, 00:00 local broker time for swap crediting.
- Weekend close and Monday open gaps. Wide spreads, limited liquidity.
- Illiquid pairs anytime. AUD/NOK, EUR/HUF — don't trade these without understanding the typical spread.
- Bank holidays. US holiday = thin USD pair liquidity.
Your EA or manual trading should have a spread guard that refuses to open trades above a threshold. Aurion includes this as a built-in safety rule — trades above the configured spread cap are blocked at the pre-trade stage with a clear reason code.
What to do with this
Three concrete takeaways:
- Compare effective cost, not advertised spread. Add commission to spread cost on Raw accounts and compare total round-trip USD per standard lot. The "from 0.0 pips" marketing is meaningless until you do this arithmetic.
- Verify spread during your trading session. If you trade the London open, check spreads at 7 a.m. UTC. If you trade Asian session, check at 2 a.m. UTC. Brokers with good London-hour spreads sometimes have mediocre Asian spreads and vice versa.
- Always run a spread filter. Whether you trade manually with a mental rule ("I don't take this setup if spread > 2 pips") or with an EA spread guard, the habit of refusing bad execution is one of the cheapest edges in trading.
Spread is the single cost you pay on every trade, every time. A half-pip difference across 500 trades is 250 pips — roughly the size of a single good month of trading. It adds up.
Related reading
- What Is a Pip and a Point? — the underlying unit
- What Is Slippage in Trading? — the other execution cost that widens with volatility