What is a Spread?
In forex trading, the spread is the difference between the bid price (the price at which you can sell) and the ask price (the price at which you can buy). This difference is measured in pips — the smallest standard unit of price movement in a currency pair.
For example, if EUR/USD is quoted with a bid of 1.08500 and an ask of 1.08506, the spread is 0.6 pips. This means that the moment you open a position, it starts with a small unrealised loss equal to the spread. The market needs to move in your favour by at least the spread amount before your trade becomes profitable.
The spread is the primary transaction cost in forex trading, analogous to the commission charged by a stockbroker. Unlike a flat-fee commission, however, the spread is a variable cost that fluctuates with market conditions, making it essential for traders to understand what affects spread width and how to minimise its impact on profitability.
On a standard account at QuantaraEX, the spread is your only trading cost — there are no additional commissions. On ECN and Pro accounts, spreads are tighter (sometimes zero) but a small per-lot commission applies. The total cost (spread plus commission) is typically lower on ECN accounts for active traders.
Bid / Ask Example
When you buy, you pay the higher ask price. When you sell, you receive the lower bid price. The difference (0.6 pips = $6.00 per standard lot) is the cost of the trade.
Variable vs Fixed Spreads
Forex brokers offer two types of spread models. Understanding the differences is crucial for choosing the right account type.
Variable (Floating) Spreads
Variable spreads change continuously based on supply and demand in the interbank market. When liquidity is high (London-NY overlap), spreads compress to their lowest levels. During low-liquidity periods or around news events, they widen.
Fixed Spreads
Fixed spreads remain constant regardless of market conditions. The broker absorbs the risk of spread fluctuations, typically offering spreads that are wider than the variable average but narrower than variable peaks.
Why QuantaraEX Chose Variable Spreads
Variable spreads provide a more transparent and fairer pricing model. During the 80-90% of the trading day when conditions are normal, our clients benefit from spreads that are tighter than any fixed spread could offer. For high-impact news events, we recommend reducing position sizes or waiting for spreads to normalise rather than paying a permanent premium via fixed spreads.
How QuantaraEX Keeps Spreads Tight
Tight spreads are not a marketing claim — they are the result of infrastructure, technology, and liquidity relationships built over years.
Multi-Provider Aggregation
We aggregate real-time pricing from 12+ tier-1 liquidity providers, including major banks (JP Morgan, Citi, UBS, Deutsche Bank) and non-bank market makers (XTX Markets, Citadel Securities). Our system constantly selects the best bid from one provider and the best ask from another, ensuring clients see the tightest possible spread.
Smart Order Routing
Our proprietary SOR engine evaluates available liquidity across all providers in under 5 milliseconds. It considers not just the displayed price but also the depth of available liquidity, historical fill rates, and recent slippage to route each order to the optimal provider.
Co-Located Servers
Our matching engine is co-located in Equinix LD4 (London) and NY4 (New York) data centres, the same facilities used by the world's largest banks. This minimises latency and ensures our pricing reflects the true interbank market with negligible delay.
No Dealing Desk (NDD)
QuantaraEX operates a strict No Dealing Desk model. We do not take the other side of your trades or manipulate spreads. All orders are passed through to our liquidity pool. This eliminates conflicts of interest and ensures transparent pricing.
Deep Order Book
Our aggregated order book typically shows 50-100+ million USD of liquidity within 1 pip of the market price for major pairs. This depth means that even large orders can be filled without significantly moving the market or experiencing slippage.
Continuous Optimisation
Our quant team continuously analyses execution quality, spread distributions, and provider performance. Underperforming liquidity providers are replaced, and our routing algorithms are updated weekly to adapt to changing market microstructure.
Spread Comparison Tables
Below are typical spreads across all three QuantaraEX account types for major, minor, and exotic currency pairs. All values are in pips and represent average conditions during peak liquidity hours.
Major Pairs
| Pair | Standard | Pro | ECN |
|---|---|---|---|
| EUR/USD | 0.6 pips | 0.2 pips | 0.0 pips |
| GBP/USD | 0.9 pips | 0.4 pips | 0.1 pips |
| USD/JPY | 0.7 pips | 0.3 pips | 0.0 pips |
| USD/CHF | 1.2 pips | 0.5 pips | 0.2 pips |
| AUD/USD | 0.8 pips | 0.4 pips | 0.1 pips |
| USD/CAD | 1.0 pips | 0.5 pips | 0.2 pips |
| NZD/USD | 1.2 pips | 0.6 pips | 0.2 pips |
Minor Pairs (Crosses)
| Pair | Standard | Pro | ECN |
|---|---|---|---|
| EUR/GBP | 1.2 pips | 0.6 pips | 0.3 pips |
| EUR/JPY | 1.3 pips | 0.7 pips | 0.3 pips |
| GBP/JPY | 1.8 pips | 0.9 pips | 0.5 pips |
| AUD/JPY | 1.5 pips | 0.8 pips | 0.4 pips |
| EUR/AUD | 1.6 pips | 0.8 pips | 0.4 pips |
| GBP/CHF | 2.0 pips | 1.0 pips | 0.6 pips |
| EUR/CAD | 1.8 pips | 0.9 pips | 0.5 pips |
| AUD/NZD | 1.8 pips | 0.9 pips | 0.5 pips |
Exotic Pairs
| Pair | Standard | Pro | ECN |
|---|---|---|---|
| USD/TRY | 15.0 pips | 10.0 pips | 8.0 pips |
| EUR/TRY | 18.0 pips | 12.0 pips | 9.0 pips |
| USD/ZAR | 8.0 pips | 5.0 pips | 3.5 pips |
| USD/MXN | 6.0 pips | 4.0 pips | 3.0 pips |
| USD/SGD | 2.5 pips | 1.5 pips | 1.0 pips |
| EUR/PLN | 5.0 pips | 3.5 pips | 2.5 pips |
ECN and Pro accounts also charge a per-lot commission ($3.00/side and $3.50/side respectively). Factor this into your total cost comparison. All spreads shown are indicative averages during normal market conditions. Actual spreads may vary.
Factors Affecting Spread Width
Understanding why spreads widen and tighten helps you choose the optimal times to trade and avoid unnecessarily high costs.
Market Liquidity
Spreads are tightest when liquidity is highest. During the London-New York overlap (13:00-17:00 GMT), the largest number of market participants are active, creating deep order books and compressing spreads. Conversely, during the late Asian session or around the daily rollover (22:00 GMT), fewer participants mean wider spreads.
Economic Data Releases
Spreads temporarily widen around major economic events (NFP, CPI, central bank decisions) because liquidity providers pull their orders to avoid being caught on the wrong side of a surprise. Spreads may widen to 3-5x their normal level in the seconds before and after high-impact releases.
Time of Day
Each currency pair has optimal trading hours based on its home sessions. EUR/USD spreads are tightest during the London session, USD/JPY during Tokyo and London-NY overlap, and AUD/USD during the Sydney-Tokyo overlap. Trading outside these windows typically means paying wider spreads.
Currency Pair Category
Major pairs (EUR/USD, GBP/USD, USD/JPY) have the tightest spreads due to their massive liquidity. Minor or cross pairs (EUR/JPY, GBP/CHF) have moderately wider spreads. Exotic pairs (USD/TRY, USD/ZAR) have the widest spreads because liquidity is thinner and volatility higher.
Market Volatility
During periods of extreme market stress — geopolitical crises, flash crashes, sudden central bank actions — spreads can widen dramatically across all pairs. During the initial COVID-19 panic in March 2020, even EUR/USD spreads widened to 5-10 pips at some brokers.
Broker Technology & Liquidity Providers
The number and quality of a broker's liquidity providers directly affects spread tightness. QuantaraEX aggregates pricing from multiple tier-1 banks and non-bank market makers, using smart order routing to deliver the best available bid and ask at any given moment.
Best Times for Tight Spreads
Timing your trades to coincide with peak liquidity can significantly reduce your spread costs over time. Here is a breakdown by session.
London-NY Overlap (13:00-17:00 GMT)
TightestThe absolute best window for tight spreads on all major and most minor pairs. Both European and American institutional participants are active, creating maximum depth in the order book. EUR/USD can trade at 0.1-0.3 pips on ECN accounts.
London Morning (08:00-12:00 GMT)
Very TightThe London open brings the full weight of European institutional liquidity. Spreads on EUR/GBP, GBP/USD, EUR/CHF, and other European pairs are at their daily best. UK and eurozone data releases occur during this window.
Tokyo-London Overlap (08:00-09:00 GMT)
Tight for JPY pairsThis brief overlap is the best time for JPY crosses (EUR/JPY, GBP/JPY, AUD/JPY). Both Asian and European participants are active. Also good for AUD and NZD pairs.
Asian Session (00:00-07:00 GMT)
Wide for EUR, GBPSpreads on European pairs (EUR/USD, GBP/USD, EUR/GBP) are typically 2-3x wider than during London. However, USD/JPY and AUD/USD spreads remain reasonable during the Tokyo session. Trade according to the active session.
Spread Cost Impact — A Real Example
Consider a day trader who executes 10 round-trip trades per day on EUR/USD with 1 standard lot per trade. Here is how spread costs compare across account types over a month (22 trading days):
| Account | Cost per Trade | Daily (10 trades) | Monthly (220 trades) |
|---|---|---|---|
| Standard (0.6 pip) | $6.00 | $60.00 | $1,320.00 |
| Pro (0.2 pip + $7 comm) | $9.00 | $90.00 | $1,980.00 |
| ECN (0.0 pip + $6 comm) | $6.00 | $60.00 | $1,320.00 |
Note: ECN and Standard accounts have similar all-in costs for EUR/USD. The ECN advantage becomes more apparent on pairs where the raw spread saving exceeds the commission, and in execution quality (no markup on the spread).
Tips for Minimising Spread Costs
Small savings on spreads compound dramatically over hundreds of trades. Here are practical steps to reduce your spread costs.
Trade During Peak Hours
Focus your trading activity during the London and London-NY overlap sessions. Avoid the rollover period (22:00-00:00 GMT) and major holiday periods when spreads are widest.
Stick to Major Pairs
If spread costs are a concern, focus on the seven major pairs where spreads are tightest. A 0.6-pip spread on EUR/USD costs far less than a 15-pip spread on USD/TRY.
Use Limit Orders
Limit orders allow you to specify your desired entry price. If you are not in a rush, a limit order can save you the half-spread cost compared to a market order that fills at the ask.
Choose the Right Account Type
Active traders (10+ trades/day) typically save money on ECN accounts despite the commission. Casual traders (1-3 trades/day) may prefer Standard accounts for simplicity.
Avoid Trading Around Major News
If your strategy is not specifically designed for news trading, consider staying flat for 5 minutes before and after high-impact releases when spreads spike.
Consider Spread as Part of Risk
Include the spread in your risk calculation. If your stop-loss is 30 pips and the spread is 1 pip, your effective risk is 31 pips. This matters more for short-term strategies with tight stops.
Experience Our Tight Spreads
Open a free demo account and see QuantaraEX's live spreads in action. Compare our pricing against your current broker — the difference adds up.