To compare a low spread forex broker properly, look past the advertised “from” figure and collect three numbers: the average spread on your own pair in the hours you trade, any commission turned into pips, and the cost per trade they add up to. The formula is all-in pips × pip value × lots. This guide works through it with an example, explains why spreads move, and gives you a demo check to run before you fund an account.
TL;DR: The advertised spread is a best case. Measure the average spread on your pair across your trading hours, add any commission as pips per round trip, then multiply by pip value and lots. In a hypothetical example, a 0.2-pip account with commission costs USD 9 per lot per trade, against USD 12 for a 1.2-pip spread-only account. Check the live spread on a free demo before you choose.
The examples use EUR/USD, where one pip is 0.0001 and one standard lot of 100,000 units moves USD 10 per pip. Broker A and Broker B below are hypothetical accounts built to show the method. Their numbers are not market data.
What a low spread really means
Every forex price has two sides. The bid is the price you can sell at, and the ask is the price you can buy at. The gap between them is the bid-ask spread, counted in pips. A pip is the small standard price step of a pair, 0.0001 on EUR/USD.
You pay the spread once per round trip. A buy opens at the ask, but the position is valued at the bid. So a new trade starts slightly in loss, by the width of the spread. Close it at once and that gap is your cost. A lower spread means a smaller head start for the market. The glossary entry on the spread in forex shows how it appears on a quote screen.
Retail prices sit on top of a very large market. In its full results, the BIS Triennial Survey put global foreign exchange turnover at $9.5 trillion per day in April 2025, up 27% from April 2022 (BIS Quarterly Review, December 2025). Spot trades made up 31% of it, and sales desks in the UK, the US, Singapore and Hong Kong SAR handled 75% of the total (BIS commentary). These figures describe dealer trading. They say nothing about any one broker’s spread, which is why you have to measure that yourself.
How to turn a spread into money
A spread in pips means little until you turn it into money. The formula is short: cost per trade = spread in pips × pip value × lots. The guide to lot size in forex explains how pip value follows from the size you trade.
Hypothetical example: you trade 1 lot of EUR/USD, so each pip is worth 0.0001 × 100,000 = USD 10. If the average spread you pay is 1.2 pips, each round trip costs 1.2 × 10 × 1 = USD 12. Make 40 trades a month at that size, and the spread alone costs USD 480.
Against the price itself, the number looks small. The ECB euro reference rate for the US dollar was 1.1214 on 10 November 2026 (daily XML). At that level one pip is 0.0001 ÷ 1.1214, about 0.89 basis points of the price, and 1.2 pips is about 1.07 basis points. The reference rate is a single daily rate, not a bid or an ask, so use it only to size a pip.
A small cost per trade still adds up with every trade you make. That is why frequent traders feel the spread most. The forex scalping guide shows what it does to a short-term strategy.
Spread-only and commission accounts side by side
Brokers price trades in two main ways. A spread-only account builds the whole trading cost into the spread. A raw spread account quotes a narrower spread and charges a separate commission. The second type always shows the lower headline spread, so compare the all-in cost instead.
| Cost item, 1 lot EUR/USD | Broker A (hypothetical), spread-only | Broker B (hypothetical), raw spread plus commission |
|---|---|---|
| Average spread | 1.2 pips | 0.2 pip |
| Commission per round trip, in pips | 0 | 0.7 pip |
| All-in cost | 1.2 pips | 0.9 pip |
| Cost per trade | USD 12 | USD 9 |
| Cost of 40 trades | USD 480 | USD 360 |
Broker B’s headline spread looks six times lower than Broker A’s, 0.2 pip against 1.2. Its all-in cost is only 25% lower, USD 9 against USD 12. Over 40 trades that is still USD 120 a month in Broker B’s favour. The commission account wins here, but by far less than the headline suggests.
Watch how the commission is quoted. The spread is paid once per round trip, while a commission is often charged per side: once to open and once to close. Double a per-side figure before you add it to the spread. Write every commission as pips per round trip, and the two account types become directly comparable for the pair and size you trade.
Why the spread you pay moves during the day
An advertised spread is often written as “from” a number. That is the narrowest the spread gets, not its average. Your real cost depends on when you trade.
Research on the dealer market shows one reason. Studying EUR/USD and USD/JPY on the EBS electronic broking system, Ito and Hashimoto reported: “A negative correlation is observed between the number of deals and the width of bid-ask spread during business hours” (NBER Working Paper 12413). In plain terms, more deals went with narrower spreads. The same study found volatility and spreads moving in opposite directions in that sample, so it does not show that volatility alone widens spreads.
Time of day matters as well. The BIS Markets Committee studied the sterling “flash event” of 7 October 2016, which happened during early Asian trading hours. Its report “places significant weight on the time of day and mechanistic amplifiers” (BIS Markets Committee).
Stress does not always widen dealer spreads. During the April 2025 shock, the BIS Quarterly Review found that “liquidity, as measured by bid-ask spreads, remained rather resilient” (BIS Quarterly Review, December 2025). Over a longer span, a BIS paper finds that “the average bid-ask spread has significantly declined across stock, foreign exchange and government bond markets over the past 25 years” (BIS Working Paper 1229). Both describe wholesale markets, and a retail broker’s spread can behave differently.
Data releases are the moment most traders notice. Hypothetical example: if a pair that averages 0.8 pip quotes 3.0 pips for a moment at a data release, a 1-lot trade opened then costs 3.0 × 10 = USD 30 instead of USD 8. The average across your own trading hours is the number to compare.
Costs that sit outside the spread
The spread is the cost you see first. Commission aside, other items can change the total:
- Overnight financing. A position held past the daily cut-off may pay or receive an amount based on the interest-rate gap between the two currencies. The glossary explains overnight financing and rollover.
- Slippage. In a fast market, an order can fill at a worse price than the one on screen. The slippage entry shows why.
- Requotes. A platform may offer a new price before it fills an order, as the entry on requotes describes. A limit order sets the worst price you accept, though it may not fill.
A day trader who closes every position before the cut-off pays mainly spread and commission. A swing trader who holds for days should add the overnight amount, since it applies to each day past the cut-off.
Measure a broker’s real spread on a demo first
You can collect the numbers yourself before any money is at stake. Run this check on each broker you are considering:
- Pick the pair and the hours you actually trade. A London-session EUR/USD trader and an Asian-session trader of a yen pair need different numbers.
- Open a demo and note the spread on that pair at three set times each day, for example the London open, the London and New York overlap and late in the Asian session. Keep this up for a week.
- Note the spread around one scheduled data release, then average all your readings.
- Get the commission, if there is one, and turn it into pips per round trip. Double a per-side figure.
- If you hold trades overnight, read the overnight rate for the pair on the platform.
- Work out cost per trade = all-in pips × pip value × lots, then multiply by your trades per month.
If the monthly total looks high, the cheaper fix may be fewer trades, as the guide on how to avoid overtrading explains.
Check the regulator before the price
A low spread from a firm you cannot verify is no bargain. Before you compare prices, check that the firm appears on its regulator’s register, such as the FCA Financial Services Register in the UK or the CySEC register of investment firms in Cyprus.
Regulators also set rules for retail CFD trading in their own markets. A CFD is a contract that pays the price change of an asset without you owning it. The FCA’s permanent rules, in force for CFDs from 1 August 2019, “Limit leverage to between 30:1 and 2:1” and “Provide protections that guarantee a client cannot lose more than the total funds in their CFD account” (FCA, PS19/18). ESMA’s EU measures from 1 August 2018 set limits of “30:1 for major currency pairs; 20:1 for non-major currency pairs, gold and major indices” (ESMA).
In Australia, ASIC’s order restricts retail CFD leverage to 30:1 on major currency pairs from 29 March 2021 (ASIC 20-254MR). The order was later extended “for a further five years to 23 May 2027” (ASIC 22-082MR). For conduct in the wider market, the FX Global Code, last updated in December 2024, sets out principles for a market in which participants can “transact at competitive prices”.
Spreads at Volity
Volity spreads are dynamic, which means they move with the market, and they start from 0.6 pip. They are tighter on the Pro and VIP accounts. The Markets account is commission-free, so its spread is the whole trading cost before any overnight amount. Pro and VIP trade on tighter spreads with a per-lot commission. The full cost schedule is on the Volity charges and fees page.
The current spread for each instrument is shown on the Volity MT platform, so you can run the check above on live prices. A free demo is available on every account tier. Positions held past 22:00 GMT may pay or receive an overnight amount, and the rate for each instrument is shown on the platform. Under the execution policy, trades are executed at the best available market price.
Forex trades 24/5 on Volity, with leverage up to 1:500 by market. Crypto and a growing range of other markets, including gold, silver, US500, US100 and WTI, trade 24/7. Stock CFDs go up to 1:20. Where UBK Markets Ltd provides the trading service, execution and client-money handling are governed by its client agreement and policies; UBK Markets Ltd is authorised by CySEC, licence 186/12.
Whichever broker you choose, compare the all-in cost per trade on your pair, in your hours, at your size. The headline spread is only where that sum starts.
Fact check: FX turnover from the BIS Triennial Survey (BIS Quarterly Review, December 2025). Spread research from NBER Working Paper 12413, the BIS Quarterly Review (December 2025), BIS Working Paper 1229 and the BIS Markets Committee. Retail CFD rules from the FCA (2019), ESMA (2018) and ASIC (2020, extended 2022). EUR/USD reference rate from the ECB for 10 November 2026; pip and cost figures are our own arithmetic, and Broker A and Broker B are hypothetical. Volity details from volity.io, checked 11 November 2026.
Frequently asked questions
Is the advertised spread what I will pay?
Usually not. A spread written as “from” a number is the narrowest it gets. Your real cost is the average spread across the hours you trade, plus any commission in pips. Measure it on a demo before you decide.
Does a raw or zero-spread account mean free trading?
No. An account with a very narrow raw spread normally charges a separate commission. Turn it into pips per round trip and add it to the spread. In the hypothetical example, a 0.2-pip spread plus commission came to 0.9 pip all-in.
When are forex spreads widest?
Research on the EBS dealer market found narrower spreads when more deals were done, so quieter hours tend to cost more. A quote can also widen for a moment around a data release. Check your pair at several times of day.
Is a spread-only account cheaper than a commission account?
It depends on the all-in cost. In the hypothetical example, a 1.2-pip spread-only account cost USD 12 per lot, while a 0.2-pip account with a 0.7-pip round-trip commission cost USD 9. Run the same sum with real quotes for your pair.
How do I work out what a spread costs me?
Multiply the spread in pips by the pip value and by your lots. On EUR/USD one standard lot is worth USD 10 per pip, so a 1.2-pip spread costs USD 12 per round trip. Multiply by your trades per month for the monthly cost.
How can I check a broker’s spreads before I fund an account?
Open a free demo and note the spread on your pair at three set times a day for a week, plus once around a data release. Average the readings, add any commission in pips, and check the firm on its regulator’s register.
