The average spread in forex typically ranges between 1 to 3 pips for major currency pairs like EUR/USD, depending on the broker, market conditions, and account type. Some brokers such as Defcofx offer significantly tighter spreads, often as low as 0.3 pips, especially for active or high-volume traders.
Key Takeaways
- Forex spreads average 1–3 pips for most major currency pairs, but vary by broker and account type.
- Spreads affect your trading costs, especially in scalping or short-term strategies.
- Fixed vs. variable spreads offer different pros and cons based on market conditions.
- Factors like volatility, liquidity, and session time can widen or tighten spreads.
- Defcofx offers ultra-tight spreads with no commissions, ideal for high-frequency traders.
What Is a Spread in Forex?
In forex trading, the spread is the difference between the bid and ask prices. It reflects the cost of entering and exiting trades and is typically measured in pips. A tighter spread means a trader reaches break-even faster and incurs lower transaction costs over time.
For example, if EUR/USD is quoted at 1.1050/1.1052, the spread is 2 pips. If you buy and then immediately sell, you’d lose 2 pips due to the spread alone.
This is why spreads are important, especially for short-term or high-frequency traders. Even without paying a commission, every pip counts.
Fixed vs. Variable Spreads
Fixed spreads remain constant, even in volatile markets. They offer predictability, making them popular among beginners. However, they are often slightly wider to account for risk during volatile conditions.
Variable spreads, offered by most modern brokers, fluctuate based on market activity and liquidity. During peak sessions (like the London/New York overlap), spreads are very tight. But during high-impact news or off-hours, they can widen substantially.
Choosing between the two depends on your strategy. Scalpers and algorithmic traders often prefer variable spreads for cost efficiency, while newer traders may choose fixed spreads for stability.
What Affects Forex Spreads?
Forex spreads are not fixed; they fluctuate throughout the trading day and can vary widely depending on several interconnected factors. Understanding what affects spreads is crucial for managing trading costs and knowing when to enter or avoid the market.
Here are the five core elements that influence forex spreads:
Liquidity of the Currency Pair
Liquidity refers to how easily a currency pair can be bought or sold without causing a significant price change. Major pairs like EUR/USD, USD/JPY, and GBP/USD have high liquidity because they’re traded in massive volumes globally. As a result, these pairs typically have tighter spreads, sometimes as low as 0.1–1.0 pip under optimal conditions.
In contrast, exotic or low-volume pairs such as USD/TRY or EUR/ZAR experience wider spreads, often exceeding 5 to 10 pips, due to fewer buyers and sellers in the market. The less liquid a pair is, the more risk the broker takes on, which is reflected in a wider spread.
Market Volatility and News Events
Volatility increases unpredictability in the market, and brokers widen spreads to manage the risk of rapid price movements. Major news releases like interest rate decisions, non-farm payrolls (NFP), or geopolitical developments can cause spreads to widen significantly, even on highly liquid pairs.
For example, EUR/USD might normally trade with a 1-pip spread, but during an ECB rate announcement, it could temporarily widen to 5 pips or more.
This can severely impact traders using tight stop-losses or high leverage, as wider spreads increase entry/exit costs and can lead to premature stop-outs.
Time of Day and Trading Sessions
Forex is a 24-hour market, but it doesn’t maintain the same activity level throughout the day. The London and New York session overlap (8 AM–12 PM EST) is typically the most active period, featuring the tightest spreads due to high liquidity.
During less active periods like the Asian session or weekends, trading volume drops, and spreads tend to widen. This is especially true for pairs that don’t include JPY or AUD, which dominate Asian market flows.
Example:
- The EUR/USD spread might be 1.0 pip during the London session.
- The same pair may widen to 2.5 pips during the early Asian hours when liquidity is thinner.
Time your trades during peak sessions to enjoy tighter spreads and better price execution.
Type of Broker and Pricing Model
Different brokers use different models to price trades, and this directly affects the spreads you’ll see:
- Market Makers (Dealing Desk): Often offer fixed spreads. They create their own market and may trade against you. While spreads are predictable, they’re usually a bit wider to cover risk.
- ECN Brokers (Electronic Communication Network): Connect your orders directly to a pool of liquidity providers. ECN brokers offer raw, variable spreads, often starting near zero, and charge a small commission per trade.
- STP Brokers (Straight Through Processing): Similar to ECN but often with slightly marked-up spreads instead of separate commissions.
Why it matters: ECN/STP brokers are generally better for experienced traders who want the tightest possible spreads and fast execution. Beginners may prefer fixed spreads for simplicity.
Account Type and Trading Volume
Many brokers offer different account tiers based on deposit size, trading volume, or account type (e.g., standard, pro, ECN, VIP). Higher-tier accounts typically enjoy lower spreads or additional perks like lower commissions, tighter execution, or rebates.
For example, a standard account may show 1.5–2.0 pip spreads on EUR/USD, while a professional account might offer 0.5 pips or less on the same pair.
Why Spreads Matter in Trading
Spreads are a trader’s invisible cost. Over time, wide spreads can eat into profits or increase losses. For example, a trader making 10 trades a day with a 2-pip spread pays 20 pips daily which is more than 400 pips monthly.
That’s why scalpers and day traders need brokers with the tightest spreads and lowest latency. Lower trading costs mean better profit potential and faster break-even levels on each trade.
Looking to reduce your trading costs? Start with a broker that gives you access to raw spreads and fast execution. Open a free demo or live account with Defcofx and test our ultra-low spread environment today.
Defcofx: Designed for Low-Cost Trading
- Spreads from 0.3 pips.
- No commissions. No swap fees.
- Instant withdrawals in under 4 hours.
This is the trading experience offered by Defcofx. Whether you’re scalping, swing trading, or using EAs, the broker’s optimized infrastructure and high leverage environment (up to 1:2000) help traders of all skill levels reduce costs and gain execution precision.
Unlike brokers who inflate spreads during volatility, Defcofx aims to keep pricing fair and consistent without hidden charges.
How to Compare Brokers by Spreads
Don’t fall for “from 0.0 pips” marketing lines alone.
Here’s what to do:
- Check average spreads during active sessions. Minimum spreads often apply only to ideal conditions.
- Use demo accounts. Experience real-time spread behavior and execution firsthand.
- Verify trading conditions. Check if commissions, slippage, or inactivity fees apply.
- Track spread behavior during news events. Spreads that stay tight even during volatility show strong liquidity infrastructure.
| Broker Type | Spread Type | Commissions | Total Cost per Trade | Best For | Example Cost (EUR/USD) |
| Standard Account Broker | Fixed or Variable | None | Higher (spread-only) | Beginners, low-frequency | ~1.5–2.5 pips |
| ECN Broker (Raw Spread) | Variable (Raw) | Yes | Lower (spread + fee) | Scalpers, high-frequency | ~0.1 pip + $6/lot |
| Hybrid Broker (Like Defcofx) | Tight Variable | None | Ultra-Low (no fee) | All traders, cost-focused | ~0.3–0.5 pips |
When you find a broker that balances cost, execution, and transparency, you’ve found one worth committing to.
Conclusion
So, what is the average spread in forex? On major currency pairs, expect 1 to 3 pips, though this varies with broker, time of day, and liquidity. Traders focused on reducing costs, especially intraday and scalping strategies, benefit the most from consistently low spreads.
Defcofx stands out by offering spreads as low as 0.3 pips, with no commissions or hidden fees. Combined with fast withdrawals, MT5 access, multilingual support, and a regulated trading environment, it’s built for serious traders who value execution efficiency.
Ready to trade with tighter spreads and no commissions? Open your Defcofx account today and start optimizing your trades from the very first pip.Frequently Asked Questions
Typically between 1–3 pips on major pairs like EUR/USD. Some brokers offer tighter spreads depending on market liquidity and account type.
Spreads are the cost of entering a trade. Tighter spreads mean lower costs, especially for scalpers and intraday traders who open multiple positions.
Fixed spreads offer predictability, but variable spreads are often tighter and more accurate in liquid markets. Most professional traders prefer variable.
Defcofx offers spreads starting at 0.3 pips with no added commissions, making it highly competitive for active and professional traders.
Use a demo account to monitor live spreads during different trading sessions. This helps you evaluate execution speed and cost conditions.
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