Fixed vs Variable Spreads in Forex: Differences, Costs and How to Decide
BY TIOmarkets
|March 24, 2026The spread is one of the most direct trading costs you face in forex. It is the difference between the buy price and the sell price quoted by your broker, and it is paid on every trade you open. Brokers offer spreads in two main forms: fixed and variable.
Understanding how each type works, what drives the difference in costs, and how they behave under different market conditions can help you evaluate trading costs more clearly and choose an account structure that suits how you trade.
What Is a Spread in Forex Trading?
When you open a forex position, your broker quotes two prices simultaneously: the ask price, at which you can buy, and the bid price, at which you can sell. The spread is the gap between these two prices, measured in pips. It represents an immediate cost to the trader, because the position starts slightly in negative territory by the amount of the spread.
For example, if the ask price on EURUSD is 1.10005 and the bid price is 1.09995, the spread is 1.0 pip. Before the trade can become profitable, the market must move in your favour by at least the amount of the spread.
Spreads vary across instruments. Major currency pairs such as EURUSD and GBPUSD typically carry narrower spreads than minor or exotic pairs, reflecting higher liquidity and tighter competition among market participants. The type of spread your broker offers — fixed or variable — determines how that gap behaves over time and under different market conditions.
What Are Fixed Spreads?
A fixed spread remains constant regardless of market conditions. Whether the market is calm or volatile, whether it is the middle of the London session or the early hours of the Asian session, the spread quoted stays the same. The broker guarantees that the difference between the buy and sell price will not change.
Fixed spreads are typically offered by market maker brokers, who act as the counterparty to client trades rather than passing orders directly to the interbank market. Because the broker is setting the price rather than sourcing it from external liquidity, it can hold the spread constant. In exchange for that certainty, fixed spreads are generally wider than the tightest variable spreads available during periods of high liquidity.
The appeal of fixed spreads is predictability. A trader who knows the spread will always be 2.0 pips on EURUSD can calculate transaction costs with precision before placing any trade. This can be useful for traders who plan entries and exits around specific cost assumptions.
However, fixed spreads come with trade-offs. During high-liquidity periods when the interbank market is pricing EURUSD very tightly, a trader on a fixed spread account is still paying the same wider spread, rather than benefiting from the improved market conditions. Additionally, brokers offering fixed spreads may widen them temporarily during extreme volatility or major news events, or apply requoting, where the price you requested is no longer available by the time the order is processed.
What Are Variable Spreads?
A variable spread, also called a floating spread, changes in real time in response to market conditions. When liquidity is high and many market participants are actively quoting prices, the spread narrows. When liquidity is thin, volatility is elevated, or a major news announcement is imminent, the spread widens.
Variable spreads are typically associated with brokers that source pricing from external liquidity providers and pass a version of that pricing on to clients. The spread reflects the actual state of the market at any given moment rather than a fixed price set by the broker. In practice, this means variable spreads can be very tight during the most liquid parts of the trading day, particularly during the London session and the overlap between London and New York, but can widen significantly around major economic data releases or during periods of low market activity such as the Asian session for European pairs.
The trade-off with variable spreads is that costs are not fully predictable in advance. A trader who enters during a news spike may pay a spread that is several times wider than the typical quoted minimum. This makes it important to understand when spreads are likely to be at their narrowest and to factor potential spread widening into risk management, particularly around scheduled events such as central bank announcements, non-farm payrolls, or inflation data releases.
How Variable Spreads Behave Around News Events
One of the most practically important characteristics of variable spreads is their behaviour around high-impact news releases. In the minutes before and immediately after a major announcement, liquidity in the market can drop sharply as participants pull their quotes and wait for the initial volatility to pass. During this window, variable spreads can widen substantially, sometimes to multiples of the typical spread.
For traders who actively trade news events, this widening is a direct cost consideration. An entry placed during peak spread widening will start the trade at a larger deficit than normal. For traders who hold positions through news events without intending to trade them, the widening spread affects the mark-to-market value of the position temporarily, even if the position is not closed during that window.
Understanding the typical spread behaviour around events relevant to the instruments you trade is part of managing transaction costs effectively.
Comparing the Two: Key Differences
The core difference between fixed and variable spreads comes down to certainty versus potential cost efficiency. Fixed spreads offer predictability but are generally wider on average and may include requoting in volatile conditions. Variable spreads can be tighter during liquid market conditions but widen around volatility and news, making cost estimation less straightforward.
For traders whose strategy depends on precise cost calculations, such as those placing a high volume of small trades or scaling in and out of positions at defined levels, the predictability of a fixed spread can have planning value. For traders who can time their entries around high-liquidity windows and avoid trading into major news releases, variable spreads may offer lower average costs over time.
The instrument being traded also matters. For major pairs during the London or New York session, variable spreads can be very competitive. For exotic pairs or instruments with lower liquidity, variable spreads may be wider on average and more prone to sudden widening, reducing the cost advantage relative to a fixed spread.
Neither spread type is universally preferable. The relevant question is how your trading style, strategy, and preferred instruments interact with the cost structure of each approach.
The Role of the Account Type
The spread type a broker offers is often linked to the account structure rather than being a single option across all accounts. Some brokers offer a standard account with variable spreads that include the broker's markup built into the spread, alongside a raw or ECN-style account where the spread is closer to the underlying interbank price but a separate commission is charged per lot.
In a raw pricing account, the spread itself may be very tight — sometimes near zero on major pairs during liquid conditions — but the commission adds a fixed cost per round turn lot. The total cost of the trade is therefore the spread plus the commission, rather than the spread alone. Comparing accounts of this type with fixed or standard variable spread accounts requires calculating the blended cost across both components.
Trading Fixed and Variable Spreads at TIOmarkets
TIOmarkets operates the tiomarkets.com domain under TIO Markets Ltd, authorised by the Mwali International Services Authority (MISA) in the Comoros Union. All TIOmarkets accounts use variable spreads, which fluctuate in real time in response to market conditions. Spreads are typically higher than minimum figures shown.
The Standard account carries spreads from 1.1 pips with no commission, making the spread the sole transaction cost component. The Raw account carries spreads from 0.0 pips with a commission of $6 per round turn lot, giving traders access to tighter underlying pricing with a separate fixed commission cost. The VIP Black account carries spreads from 0.3 pips with no commission, sitting between the two in terms of cost structure. All spread figures are variable and typically higher than the minimums quoted.
Hedging is permitted on all account types. Traders seeking a swap-free arrangement should contact TIOmarkets directly to enquire about Islamic account eligibility and applicable conditions. Copy trading is available at TIOmarkets on both MT4 and MT5, allowing followers to copy strategy providers in real time.
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