Forex Spreads and Commissions Explained (2026 Guide)

The spread is the gap between a currency pair's buy (ask) and sell (bid) price, and it's the most basic cost of every forex trade. Some brokers charge only the spread; others tighten the spread near zero and add a separate per-lot commission instead. Neither structure is automatically cheaper — the right one depends on your trade size and how often you trade.

What a spread actually is

Quote EUR/USD at 1.1000/1.1002 and the spread is 0.2 pips — the difference between what you'd pay to buy and what you'd receive to sell at that instant. You enter a trade already slightly underwater by that amount, which is why the spread is called an implicit cost: it's baked into the price rather than itemized on a statement. Spreads are widest on exotic or thinly-traded pairs and narrowest on majors like EUR/USD and USD/JPY during peak London/New York overlap hours, and they widen automatically around high-impact news releases and low-liquidity periods like the New York close or Asian session gaps.

Spread-only vs raw-spread-plus-commission pricing

Brokers generally offer two pricing models, sometimes on the same account menu. A spread-only (or 'standard') account has no separate commission line — all of the broker's markup is folded into a wider spread. A raw-spread (or 'ECN', 'Zero', 'Razor', 'Raw') account instead shows spreads close to 0.0 pips, with the broker's charge collected as a fixed commission per lot, usually quoted per side.

• Spread-only: simpler to budget, no separate fee line, but usually 0.8-1.4 pips wider on EUR/USD
• Raw-spread plus commission: near-zero spread, but $3-$7 round-turn commission per standard lot depending on the broker
• The all-in cost for a 1-lot EUR/USD trade is often within a fraction of a pip of each other once you add the commission back in — the difference is in how the price is presented, not always in what you actually pay

How the major brokers price it

Comparing real account menus makes the pattern concrete:

• IC Markets: Raw Spread from 0.0 pips + $3.50/lot/side ($7 round turn); Standard from 0.8 pips, no commission
• Pepperstone: Razor from 0.0 pips + $3.50/lot/side; Standard folds cost into roughly a 1 pip markup
• Tickmill: Raw from 0.0 pips + $3/lot/side — one of the cheapest all-in ECN prices in the retail space; Classic from ~1.6 pips, no commission
• XM: Zero account from 0.0 pips + ~$3.50/side; Ultra Low from ~0.6 pips with no commission at all
• Exness: Raw Spread/Zero from 0.0-0.1 pips + ~$3.50/side; Standard from 0.3-1.0 pips, no commission
• Vantage: RAW ECN around 0.7 pips all-in with $3/side commission; Standard STP averages ~1.4 pips, no commission
• FP Markets: Raw from 0.0 pips + $3/lot/side (roughly 0.1-0.3 pips average all-in); Standard from 1.1-1.3 pips, no commission
• AvaTrade, Plus500, XTB: commission-free, cost built into spread — AvaTrade around 0.9 pips (often fixed rather than variable), Plus500 roughly 0.6-1.3 pips, XTB around 0.9-1 pip

Calculating your real cost per trade

For a standard lot (100,000 units) of EUR/USD, 1 pip is worth approximately $10. A spread of 1.0 pip costs $10 round-turn on that lot; a raw-spread account with a 0.1 pip spread and $7 round-turn commission costs roughly $1 + $7 = $8. On paper the raw-spread account is cheaper here — but the math flips at smaller trade sizes, because most commissions are charged per lot regardless of how tight the spread gets, so a 0.1-lot trade pays a proportionally larger commission relative to its size.

The rule of thumb: high-frequency traders and scalpers trading multiple lots a day almost always come out ahead on a raw-spread account, because the commission scales with volume they were going to pay for anyway, and the tight spread saves money on every single entry and exit. Traders holding fewer, larger positions with wider stops, or trading small size irregularly, often do just as well — sometimes better — on a simple spread-only account with no commission to calculate.

Costs the spread and commission don't cover

Spread and commission are only part of the cost of holding a position. Swap (rollover) fees apply to any trade held overnight and vary by pair, direction, and broker — some brokers offer swap-free 'Islamic' accounts that replace the swap with a flat administration fee instead. Currency conversion fees apply if your account's base currency differs from the instrument you're trading; XTB, for example, charges 0.5% on conversions, which adds up for traders funding accounts in a non-USD currency. Inactivity fees, withdrawal fees on certain payment methods, and requotes during volatile news events are all additional friction points worth checking in a broker's fee schedule before committing capital.

Watch for spread widening during news events

Even a broker with an excellent average spread can widen dramatically for a few seconds around events like US Non-Farm Payrolls or a central bank rate decision, sometimes 5-10x the normal level. Variable-spread brokers (most ECN/raw accounts) will show this expansion directly in the live quote; fixed-spread brokers hold the advertised spread steady but may requote or slip on execution price instead during the same events. Neither structure eliminates the cost of trading through high-impact news — it just moves where the cost shows up.

Market maker vs ECN/STP execution

How a broker prices its spread is tied to how it executes your trade. Market makers (dealing desk brokers) quote their own price and can take the other side of your trade; this often means fixed or tightly-controlled spreads and simpler commission-free pricing, but it also means the broker has a direct interest in your losses on some models. Plus500 and AvaTrade largely operate this way, which is common and regulated, but worth knowing.

ECN and STP brokers instead route your order to a pool of liquidity providers (banks and other market makers) and pass the raw price through, adding their markup as a transparent commission rather than a hidden spread margin. IC Markets, Pepperstone, Tickmill, and FP Markets' Raw accounts all work this way. Neither model is inherently untrustworthy under proper regulation, but ECN/STP pricing is generally considered more transparent because the commission is itemized rather than folded invisibly into the quote.

How to pick the right pricing model for you

If you scalp, run an expert advisor, or trade more than a lot or two per day, a raw-spread ECN account (IC Markets Raw Spread, Pepperstone Razor, Tickmill Raw, or similar) will almost always be cheaper over time despite the commission. If you trade occasionally, hold positions for days, or prefer not to calculate a separate commission on every trade, a spread-only account keeps things simple without necessarily costing more in practice.

Whichever model you choose, compare the actual average spread a broker delivers — not just the 'from 0.0 pips' headline number, which describes the best-case tick, not the typical one. Independent spread-tracking sites and a broker's own historical spread data (where published) are more reliable than the marketing page.

Frequently asked questions

What is the difference between a spread and a commission in forex trading?

The spread is the built-in gap between the buy and sell price of a currency pair — you pay it automatically on every trade. A commission is a separate, itemized fee some brokers charge per lot traded, usually paired with a much tighter spread than a commission-free account offers.

Is a raw-spread account always cheaper than a standard account?

Not always. Raw-spread accounts tend to be cheaper for frequent traders and scalpers trading full or multiple lots, because the commission scales with volume and the tight spread saves money on every entry. Occasional traders or those using small position sizes sometimes pay about the same, or less, on a simple spread-only account.

How much is 1 pip worth in forex?

On a standard lot (100,000 units) of a pair quoted against USD, like EUR/USD, 1 pip is worth approximately $10. On a mini lot (10,000 units) it's about $1, and on a micro lot (1,000 units) about $0.10 — commissions are typically quoted per standard lot regardless of your actual position size.

Why do forex spreads widen during news releases?

Liquidity providers pull back their quotes when volatility spikes around events like Non-Farm Payrolls or central bank decisions, because the risk of being caught on the wrong side of a fast price move increases. Variable-spread brokers show this directly as a wider quote; fixed-spread brokers may requote or slip on execution instead.

Do all brokers charge the same commission on raw-spread accounts?

No. Commissions on raw/ECN-style accounts commonly range from about $3 to $7 per lot round-turn depending on the broker — Tickmill and FP Markets charge around $3/side, IC Markets and Pepperstone around $3.50/side, and RoboForex's Prime account works out to roughly $15 per million traded.

Are there hidden costs beyond the spread and commission?

Yes — overnight swap/rollover fees, currency conversion fees if your account currency differs from the pair you trade, inactivity fees, and certain withdrawal fees can all add to the real cost of trading. Check a broker's full fee schedule, not just its headline spread.