Low Spread Forex Trading (2026): Spreads, Commissions & Real Trading Costs
BY TIOmarkets
|February 25, 2026The spread is one of the most visible costs in forex trading, but it is also one of the most frequently misread.
Traders often compare brokers on the basis of headline spread figures without accounting for commissions, execution quality, or how spreads behave during the specific conditions they trade in.
This guide explains how spreads work in practice, how they interact with other costs, what drives them wider or tighter, and what to look for when evaluating a broker's pricing structure.
What a Spread Is and How It Works
Every forex instrument is quoted with two prices: the bid (the price at which you can sell) and the ask (the price at which you can buy). The ask is always higher than the bid. The difference between the two is the spread.
When you open a long position, you buy at the ask price. When you close it, you sell at the bid. The spread means your trade starts with an immediate unrealised loss equal to the spread cost. The market needs to move in your favour by at least the spread amount before the position reaches break-even. For a short position, the same logic applies in reverse.
Spreads are quoted in pips, which is the standard unit of measurement for forex price movements. On most major currency pairs, one pip is 0.0001 of the quoted price (or 0.01 for JPY pairs). A spread of 1.1 pips on EURUSD means the ask is 0.00011 higher than the bid at that moment.
The cost in currency terms depends on position size. On a standard lot (100,000 units of the base currency), one pip of EURUSD is worth approximately $10. A 1.1 pip spread on a standard lot therefore costs approximately $11 to enter. On a mini lot (10,000 units), the same spread costs approximately $1.10. Understanding the pip value of your lot size is what converts a spread figure into an actual dollar cost per trade.
Fixed vs Variable Spreads
Brokers offer spreads on either a fixed or variable basis.
A fixed spread is quoted at a constant level under normal market conditions. Many brokers include exceptions in their terms and conditions for periods of extreme volatility, so fixed spreads may still widen in exceptional circumstances. The general trade-off is that fixed spreads are typically wider than the tightest variable spreads available during normal conditions, because the broker is absorbing the risk of providing consistent pricing during volatile periods.
A variable (or floating) spread changes in real time based on market conditions, liquidity, and the prices available from the broker's liquidity providers. During active trading hours and high-liquidity conditions, variable spreads on major pairs can be very tight. During news events, market opens, or low-liquidity periods such as late Friday and early Monday, they widen. The spreads at TIOmarkets are variable, sourced directly from liquidity providers, and narrow during normal market conditions when liquidity is high.
For most active traders, variable spreads are preferable because the average cost over time tends to be lower than fixed equivalents. For traders who specifically trade around news events and need certainty on entry cost, the spread widening around releases is a material consideration.
How Spreads Interact with Commissions
The spread is not always the complete cost of a trade. Brokers structure their pricing in two main ways: spread-only pricing, where all costs are embedded in the spread, and raw spread pricing, where a separate commission is charged per lot and the spread itself is kept as tight as possible.
Understanding which model a broker uses changes how you should read their advertised spread figures. A broker advertising 0.0 pip spreads on EURUSD is almost certainly using a commission-based model. The true cost of the trade is the commission, not the spread. A broker advertising 1.1 pip spreads with no commission has embedded their margin into the spread.
Neither model is inherently cheaper. The comparison that matters is the all-in cost per round turn, which means adding the spread cost and the commission cost together. For a standard lot on EURUSD:
A spread of 1.1 pips at $10 per pip equals $11 all-in with no commission. A spread of 0.0 pips with a $6 round-turn commission equals $6 all-in when the spread is genuinely zero, but in practice raw spreads are rarely zero for sustained periods. A spread of 0.3 pips (worth $3) plus $6 commission equals $9 all-in.
The Raw account at TIOmarkets offers spreads from 0.0 pips with a $6 round-turn commission per standard lot. The Standard account offers spreads from 1.1 pips with no commission. The VIP Black account offers spreads from 0.3 pips with no commission. These figures are account-level minimums on variable spreads and represent the tightest conditions available rather than a guaranteed constant.
For traders placing a high volume of standard lot trades, the commission-based Raw account structure can produce a lower average cost per trade than the spread-only Standard account, depending on the instruments traded and the prevailing spread conditions. For traders using smaller lot sizes, the fixed commission on Raw becomes proportionally larger relative to the trade size, which may favour the spread-only model.
What Drives Spreads Wider and Tighter
Several factors determine where spreads sit at any given moment.
Liquidity is the primary driver. When there are many buyers and sellers active in the market, the gap between the best available bid and ask prices is small, and spreads are tight. When liquidity thins out, the gap widens. This is why major currency pairs like EURUSD, GBPUSD, and USDJPY consistently have tighter spreads than exotic pairs, minor crosses, or individual stocks. The volume traded in major pairs dwarfs that of exotic instruments, producing deeper liquidity and more competitive pricing.
Time of day has a direct effect on spread width. The period of lowest spreads on most major forex pairs tends to coincide with the overlap between the London and New York sessions, roughly 13:00 to 17:00 UTC. This window sees the highest concentration of institutional activity and produces the deepest liquidity. Outside active session hours, particularly late in the New York session and during the Asian session for European pairs, spreads tend to be wider.
Scheduled news events cause temporary spread widening as liquidity providers pull back or widen their quotes around the release time to manage risk. High-impact releases such as US Non-Farm Payrolls, central bank rate decisions, and CPI prints typically produce visible spread widening in the minutes around the announcement. This is relevant for any trader who uses tight entries or tight stop-losses, as the wider spread at execution can affect entry price and stop-out levels.
Market open and close periods carry additional spread risk. The re-opening of markets after the weekend gap, and the transition from the Friday close to Monday open, tends to produce wider spreads and potential price gaps.
Spreads by Instrument Type
Spreads vary considerably across different instrument classes, and not just between brokers. The same broker will quote meaningfully different spreads on a major forex pair versus an exotic pair, an index, a commodity, or an individual stock CFD.
Major forex pairs (EURUSD, GBPUSD, USDJPY, USDCAD, AUDUSD, NZDUSD, USDCHF) typically carry the tightest spreads because of their high liquidity. On the TIOmarkets Raw account, spreads on these pairs can reach 0.0 pips under optimal conditions, though they fluctuate with market conditions. Minor and cross pairs carry wider spreads reflecting lower liquidity. Exotic pairs, such as USDTRY or USDZAR, carry notably wider spreads still, both because of lower liquidity and higher volatility.
Index CFDs, commodity CFDs, and stock CFDs are quoted differently from forex pairs. Their spreads are often expressed in points rather than pips, and the monetary cost per point depends on the contract specification for each instrument. These instruments also tend to be subject to wider spread variation around their respective market open and close times. The TIOmarkets spreads page at tiomarkets.com/en/spreads provides indicative live pricing across all instrument categories.
Spreads and Trading Style
How much the spread matters depends significantly on trading style and holding period.
Scalpers and high-frequency traders are the most sensitive to spread costs because they open and close positions rapidly, sometimes targeting only a few pips per trade. At 10 or 20 trades per day, a difference of 0.5 pips per trade compounds into a material cost difference over a month. For these traders, the Raw account structure with a tight commission and minimal spread may be more cost-efficient, depending on average lot size and trade frequency.
Day traders who hold positions for hours rather than minutes are less sensitive to entry spread but need to be aware of spreads widening around news events that fall within their holding period. The cost of a slightly wider entry is less significant when the target is 20 or 30 pips.
Swing and position traders who hold trades for days or weeks are least sensitive to spread at entry. For these traders, the overnight cost (swap) often becomes a more significant cost consideration than the entry spread. Spreads can still matter when averaging in or scaling out of positions across multiple entries, but the per-trade spread cost is a smaller proportion of the total trade economics at longer holding periods.
Trading Costs Beyond the Spread
A complete picture of trading costs includes three components: the spread, any commission, and the swap.
The swap is the overnight financing cost applied to positions held past the broker's daily rollover. TIOmarkets considers the close of the trading day to be 22:00 GMT (close of business New York time). When you hold a leveraged position overnight, you are effectively borrowing the notional value of the position. The swap reflects the interest rate differential between the two currencies in the pair (or the financing cost of the underlying asset for non-forex instruments). Depending on the direction of the trade and the interest rate differential, the swap can be a cost (negative swap) or a credit (positive swap).
For day traders who close all positions before the daily rollover, swaps are not a factor. For swing and position traders, swaps accumulate daily and can become a significant component of total costs, particularly on pairs with large interest rate differentials. TIOmarkets swap rates for each instrument are accessible through the MT4 and MT5 trading platforms under the symbol specification window.
Traders who want to avoid swap costs entirely may consider an Islamic (swap-free) account, which is available at TIOmarkets to eligible clients regardless of religious background. The Islamic account is a swap-free version of the Standard, Raw, or VIP Black account and is available on eligible symbols. To open one, register a standard account and contact the support team to request conversion. More detail is on the Islamic account page at tiomarkets.com/en/islamic.
What to Look for When Comparing Brokers on Spreads
When evaluating a broker's spread offering, the headline figure is a starting point, not the conclusion.
The first question is whether the quoted spread is a minimum or an average. A broker advertising 0.0 pip spreads may technically achieve that figure for milliseconds at a time while averaging significantly higher in normal conditions. Minimum spread figures are standard in broker marketing. Average spread figures, which are a more useful representation of real-world cost, are less commonly advertised. If a broker publishes average spread data for major pairs, that is more informative than the minimum.
The second question is what happens to spreads around news events and during off-peak hours. A broker with 0.5 pip average spreads that widens to 5 pips around news may cost more in practice than a broker with 1.0 pip average spreads that widens to only 2 pips. If you trade around news, the behaviour of spreads during those windows matters more than the resting spread.
The third question is the all-in cost including commission. As described above, comparing spread-only and commission-plus-raw-spread accounts requires calculating the total round-turn cost at your typical lot size, not comparing the spread figures in isolation.
FAQ
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TIOmarkets offers an exclusively execution-only service. The views expressed are for information purposes only. None of the content provided constitutes any form of investment advice. The comments are made available purely for educational and marketing purposes and do NOT constitute advice or investment recommendation (and should not be considered as such) and do not in any way constitute an invitation to acquire any financial instrument or product. TIOmarkets and its affiliates and consultants are not liable for any damages that may be caused by individual comments or statements by TIOmarkets analysis and assumes no liability with respect to the completeness and correctness of the content presented. The investor is solely responsible for the risk of his/her investment decisions. The analyses and comments presented do not include any consideration of your personal investment objectives, financial circumstances, or needs. The content has not been prepared in accordance with any legal requirements for financial analysis and must, therefore, be viewed by the reader as marketing information. TIOmarkets prohibits duplication or publication without explicit approval.
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