Understanding forex trading costs can feel confusing, especially with terms like raw spread and fixed spread. A raw spread in forex includes very tight spreads but comes with a separate commission fee.
This guide breaks down what is raw spread in forex trading, explaining its pros, cons, and how it works for different traders. Keep reading to learn how it affects your trading strategy.
A raw spread in forex trading refers to the difference between the bid and ask prices of a currency pair, offered without any mark-ups from brokers. It reflects direct market prices provided by liquidity providers and can start as low as 0.0 pips.
This type of pricing offers complete transparency since you trade on the actual spread from the foreign exchange market, unlike marked-up spreads seen in standard accounts.
Raw spread accounts typically charge a separate commission per lot traded instead of embedding fees into wider spreads. For example, if you trade EUR/USD with a raw spread account, you might see near-zero pip value but pay a flat fee per transaction based on your broker’s structure.
Such accounts are ideal for high-frequency traders or day traders using platforms like MetaTrader 4 to execute trades quickly and cost-effectively. Learn how this works under “3.
How Raw Spreads Work”.
Raw spreads connect you directly to the forex market. Forex brokers offering raw spread accounts provide access to institutional pricing with no mark-up on the bid/ask spread. For example, trading currency pairs like EUR/USD or USD/JPY might show a spread as low as 0.0 pips.
In such cases, you pay only the separate commission charged by your broker instead of inflated spreads. Most brokers charge around $6 per lot for this service, meaning trade costs stay predictable and transparent.
Trading platforms execute orders in real time under raw spread conditions, making it suitable for high-frequency trading or automated systems. This setup gives you direct insight into true market data without unnecessary price alterations from a market maker.
While floating spreads may vary due to volatility during major economic events, skilled traders use such fluctuations to speculate effectively using proper risk management techniques.
Lower pip values minimise your trading costs while ensuring faster execution speeds and more accurate entries within volatile forex markets like CHF or Japanese yen trades during busy hours.
Trading with raw spreads offers you reduced costs and greater transparency, leading to better precision in your trades—explore how this can enhance your results.
Raw spread accounts significantly lower your trading costs. With a total fee of $6 per lot, they are approximately 55% less expensive compared to standard accounts. This makes them perfect for high-volume traders who aim to increase profits while reducing expenses on currency pairs such as EUR/USD or USD/JPY.
You benefit from narrower bid-ask spreads with raw spreads, reducing the total expense per trade. Clear pricing ensures you pay only what the market determines, without any hidden charges.
Explore other important advantages linked to this account type under “Transparent Pricing”.
Transparent pricing ensures you access real market prices without hidden costs. Brokers often display raw spreads, meaning no markups are added to the bid/ask spread. This eliminates price manipulation and gives you a clear view of trading costs.
You see exactly what you’re paying, giving confidence in your trades. For example, with forex pairs like EUR/USD or USD/JPY, spreads remain true to the market’s actual conditions.
“Clarity in pricing empowers smarter decisions.
Raw spreads improve trading execution, making them ideal for scalping and high-frequency trading. You benefit from faster order completion, ensuring deals on tight bid/ask spreads without delays.
This speed lowers slippage risks, especially in volatile currency markets like USD/JPY or EUR/USD during peak market hours.
High-volume traders gain an edge through reduced costs and reliable pricing. Paired with transparent fees from a raw spread trading account, you can refine your strategy confidently.
Automated trading systems also thrive under these conditions due to minimal latency in price movements of major financial instruments.
Raw spreads often come with extra commission fees, which can increase total trading costs. Market fluctuations may also affect spread prices, creating challenges for some strategies.
You will need to pay a commission fee when trading with a raw spread account. Brokers often charge $6 per lot traded, which adds to your trading expenses. For example, trading 200,000 USD/JPY would require you to cover a $10 commission.
These fees can affect high-volume traders since larger trades increase commission payouts. Unlike fixed spreads that include broker costs in the bid-ask price, raw spreads offer lower variable spreads but depend on commissions for revenue.
Be sure to consider this in your trading budget and strategy when selecting your forex broker.
Market volatility can create price fluctuations that significantly widen variable spreads. During major economic events or news releases, spreads on currency pairs like EUR/USD or USD/JPY may increase sharply.
These changes occur because liquidity drops, and trading platforms adjust to reflect higher risks in the bid/ask spread.
Your trading costs might rise unexpectedly during these volatile periods if you trade using a raw spread account. High-frequency traders and day traders often face challenges with unpredictable pip value shifts, which could affect trading execution speed.
To manage this risk, consider employing a strong risk management strategy before entering trades in unstable market hours.
FX fees consist of spreads and commissions. In a raw spread trading account, brokers charge you the raw bid-ask spread directly from liquidity providers. You also pay a fixed commission, typically $6 per lot traded.
For example, if you trade 200,000 EUR/USD at an exchange rate of 1.1000, your total commission fee would amount to $11.
These fees have a notable impact on your trading costs. While the raw spread remains narrow, the added commission provides clarity in pricing. It also means more predictable expenses compared to variable spreads on standard accounts during high market volatility.
Being aware of these charges helps you plan better risk management strategies and choose cost-effective trading platforms for your approach.
Raw spreads offer fluctuating rates based on live market conditions, while fixed spreads maintain a constant difference. Your choice depends heavily on your trading method and preferred risk control measures.
When choosing between raw spreads and fixed spreads, understanding their differences can help you align your trading strategy effectively. Here’s a clear comparison:
| Feature | Raw Spreads | Fixed Spreads |
|---|---|---|
| Spread Value | Starts from 0.0 pips, fluctuates with market conditions. | Constant and predefined, regardless of market activity. |
| Pricing Transparency | Reflects real market prices directly from liquidity providers. | Broker sets prices with a built-in margin. |
| Trading Costs | Lower spreads, but separate commission charged per trade. | No additional commission, but spreads are wider. |
| Market Volatility Impact | Spreads widen during volatile or low-liquidity periods. | Remains stable, even during volatile markets. |
| Best Suited For | Scalpers and day traders focused on high-frequency trading. | Beginner traders or strategies requiring consistent costs. |
| Risk Management | Requires active monitoring during news or sudden market moves. | More predictable, allowing easier fee planning. |
Trading with raw spreads rewards precision but demands vigilance. Fixed spreads simplify costs but might limit flexibility. Understanding your trading objectives will guide your choice efficiently.
Different trading styles require distinct spread setups. Raw spreads and fixed spreads cater to varying trader preferences. Below is a comparison to help you determine which suits your needs.
| Trading Style | Raw Spreads | Fixed Spreads |
|---|---|---|
| Scalpers | Highly suitable. Raw spreads offer greater clarity and lower costs for frequent trades. | Less suitable. Broader spreads may increase trading expenses for high-frequency trades. |
| Day Traders | Effective for active traders. Lower spreads minimise costs during multiple trades in a day. | Practical for beginners. Costs are consistent, which simplifies budgeting. |
| Swing Traders | An appropriate choice. Lower spreads can reduce costs for longer trades, but commission should be factored in. | A reliable choice. Fixed spreads offer ease for medium-term trades. |
| Algorithmic Traders | Strongly preferred. Raw spreads are ideal for automated systems that depend on accuracy and competitive pricing. | Less efficient. Fixed spreads may not be advantageous for profit margins in automated trading. |
| Beginner Traders | Challenging for newcomers. Additional variability and commission fees can be more difficult to manage. | An excellent option. Fixed spreads simplify learning and provide consistent trading conditions. |
Raw spreads are ideal for professional, high-frequency, or automated traders. Fixed spreads are more suitable for beginners or those who favour simplicity.
Select a broker offering zero or low trading costs. Orbex, for example, provides ZERO Spread Accounts with just $1 per side lot commission. Brokers also vary in funding options like credit cards, bank wires, e-wallets, and cryptocurrencies.
This makes it easier to set up your raw spread trading account without complications.
Look for brokers giving cash rebates. Some reduce trading costs by up to 15%, which greatly benefits high-volume traders or those using automated trading strategies. Choose platforms with fast trading execution on popular currency pairs like EUR/USD and USD/JPY for better performance in market hours.
Always check margin requirements and risk warnings before funding the minimum deposit needed to start forex trading safely.
Raw spreads in forex trading offer lower costs and more transparency. They suit high-volume traders who value tighter bid/ask spreads with separate fees. Understanding their benefits and drawbacks can help you refine your trading strategy.
Choose a broker carefully, focusing on features like execution speed and deposit options. Applying this knowledge can improve your market analysis and decision-making confidence. Start small, stay consistent, and aim to grow as a forex trader step by step.
A raw spread is the difference between the bid and ask price of a currency pair without any additional markup from brokers. It reflects transparent pricing directly from the market.
A raw spread account offers lower spreads but typically charges a commission per trade, while a standard account includes higher spreads with no separate commission fees.
High-volume traders and day traders benefit most as they enjoy reduced trading costs due to tighter spreads and efficient trading execution.
Yes, many forex trading platforms offer floating spreads that change based on market conditions like volatility or liquidity during specific market hours.
Pip values help forex traders understand how much money they gain or lose for each price movement of their chosen currency pairs, such as EUR/USD or USD/JPY.
Risk management ensures you balance potential profits against possible losses when using leverage ratios, helping protect your money during buying and selling decisions across financial instruments like CFDs or altcoins.
