What is Raw Spread in Forex?

A raw spread in forex is the actual price difference between the bid and ask quotes in the market, without any markup from the broker. It reflects true interbank pricing and is often paired with a small commission, offering traders lower and more transparent costs than standard spreads.

Key Takeaways

• Raw spreads show real-time price differences without broker markups.
• They are usually very low (0.0–0.3 pips) during active trading hours.
• A fixed commission is typically charged per trade to cover broker costs.
• Traders who scalp or trade frequently benefit the most from raw spreads.
• ECN or STP brokers are the primary providers of raw spread trading.

What Does Raw Spread Mean in Forex?

The term “raw spread” in forex refers to the real bid-ask difference that comes directly from the liquidity providers or interbank market. There are no additional markups by the broker. This pricing is especially useful for traders who require tight spreads and transparency.

Instead of adding profit to the spread, the broker charges a fixed commission per lot traded.

For example, on the EUR/USD pair, a raw spread might be 0.1 pips, but a $7 commission is charged per standard lot. This model reflects a professional-grade trading environment where traders can see the real market.

Raw spreads are often associated with platforms that offer institutional-style access, helping retail traders achieve better pricing and execution.

Raw Spread vs. Standard Spread

Let’s break down how raw spreads differ from standard spreads.

Feature	Raw Spread	Standard Spread
Bid/Ask Pricing	True market pricing	Broker markup added
Typical Spread	0.0 – 0.3 pips	1.0 – 2.5 pips
Commission	Charged separately	Included in spread
Transparency	High	Lower
Broker Model	ECN/STP	Market Maker / STP
Best For	Scalping, Day Trading	Swing, Long-Term Trading

In simple terms, standard spreads include all broker fees inside the spread. Raw spreads split the cost into two: the actual spread plus a visible commission. This structure gives more control and clarity over your trading costs.

Who Benefits from Raw Spreads?

Scalpers, day traders, and high-frequency traders benefit the most from raw spreads. These trading styles involve many small, rapid trades where tight spreads can significantly reduce total trading costs.

A trader who places 100 trades a week will save more with 0.2-pip raw spreads (plus commission) than with a 2-pip standard spread. Even small savings per trade add up quickly.

Raw spreads also benefit experienced traders who use algorithms or high-volume strategies. These traders are highly sensitive to costs and need real-time market pricing to operate effectively.

Understanding Commissions vs. Spreads

With raw spreads, brokers don’t make money on the spread itself. Instead, they charge a fixed commission per lot traded. This commission is usually clearly listed on the broker’s website or platform.

Let’s compare a raw spread and standard spread on EUR/USD:

• Raw Spread: 0.2 pips
• Commission: $7 per standard lot
• Total Cost: about 0.9 pips in value

Now compare that to a standard spread broker charging 1.8 pips with no commission. In this example, the raw spread option is clearly cheaper. However, if the commission is too high or the spreads widen during volatility, the advantage might shrink.

Traders should always calculate the total cost per trade, not just the spread.

ECN and STP Brokers Offering Raw Spreads

Raw spreads are typically available only through ECN or STP brokers.

• ECN (Electronic Communication Network) brokers connect you directly with liquidity providers, banks, and other traders. They offer true bid/ask pricing without intervention.
• STP (Straight Through Processing) brokers route your orders directly to the market without dealing desk interference.

Both models avoid conflict of interest and deliver faster execution, better pricing, and improved transparency. If a broker claims to offer raw spreads but operates as a market maker, that’s a red flag.

These brokers are preferred by professionals and offer trading environments closer to institutional standards.

Risks and Considerations of Raw Spreads

Although raw spreads offer cost advantages, there are some risks to consider:

1. Spread Widening During News: Raw spreads are dynamic and can widen sharply during economic releases or low liquidity hours.
2. Commission Costs Add Up: Frequent trading with commissions can still become expensive if not managed carefully.
3. Execution Quality: Some brokers may advertise tight spreads but have poor execution, resulting in slippage.
4. Minimum Commission Requirements: Some brokers have a minimum commission per trade, which could make small trades less efficient.

To benefit fully from raw spreads, it’s essential to partner with a broker that combines low commissions, fast execution, and reliable platforms.

Real-Life Spread Example

Here’s a side-by-side comparison of costs using real-world data for EUR/USD:

Scenario	Raw Spread Account	Standard Spread Account
Spread	0.1 pips	1.8 pips
Commission (per lot)	$7	$0
Total Trading Cost	~$10	~$18
Savings		$8 per lot

Trading just 100 lots per month using raw spreads could save you approximately $800, even after paying commissions.

How Raw Spreads Affect Trading Strategy

Scalping and day trading benefit the most because these strategies require precision and low transaction costs. When placing many trades daily, even 0.1 pip savings matter.

Swing trading strategies may benefit less from raw spreads since trades are held for longer durations, and spread costs become less significant compared to overall profit targets.

News traders should be cautious, as raw spreads can widen significantly during announcements, potentially affecting execution and stop losses.

Ultimately, raw spreads are best for active traders looking to optimize every pip of cost and gain more control over their trade environment.

Choosing the Right Broker for Raw Spreads

When searching for a raw spread broker, make sure to consider:

• True ECN/STP model with no dealing desk.
• Published and fixed commissions.
• Low or zero swap fees.
• Fast execution speed and minimal slippage.
• Transparent spread display in real time.

Avoid brokers that only claim to offer raw spreads but hide fees elsewhere or lack real interbank connections. Do your research, read reviews, and test platforms using demo accounts.

Conclusion

Raw spreads offer forex traders a way to access real market pricing with minimal spread costs, especially when paired with a trusted broker using ECN or STP execution. They are ideal for traders who value transparency, speed, and low costs.

At Defcofx, traders get access to raw spreads starting from just 0.3 pips, with no commissions or swap fees. With up to 1:2000 leverage, 40% welcome bonuses, and global access with fast withdrawals, Defcofx is designed to support both new and experienced traders. The platform offers a professional trading experience without hidden costs or restrictions.

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