What Is Raw Spread in Forex
When you’re trading forex, every pip matters—and sometimes, every fraction of a pip. This is where raw spreads become a game-changer. Designed for serious traders who need precision, raw spreads eliminate the broker’s markup and expose the real market prices. You pay only what the interbank market charges—plus a commission. But what does this actually mean for your trading strategy, costs, and profits? Let’s dive deep into the world of raw spreads in forex and break down how they work, how they compare to other spread types, and why they might just be your ticket to next-level trading.What Is a Spread in Forex Trading
The Concept of a Spread
The spread is the fundamental cost of doing business in forex. It represents the difference between the bid price and the ask price—essentially the amount you pay to enter and exit a trade.Bid and Ask Price Defined
- Bid Price: The price at which the market (or broker) is willing to buy a currency from you.
- Ask Price: The price at which the market (or broker) will sell the currency to you.
- Spread: Ask Price – Bid Price
Types of Spreads
- Fixed Spread: Stays constant regardless of market volatility. Offered by market makers.
- Variable Spread: Changes based on liquidity and volatility. Tighter during normal conditions, wider during events.
- Raw Spread: The real interbank spread. Often close to zero but comes with a commission.
What Is a Raw Spread
Raw Spread Definition
A raw spread is the real-time price difference between the bid and ask, without any markup from the broker. It’s the raw feed from liquidity providers, which is why it can be as low as 0.0 pips.How Raw Spreads Are Calculated
The formula is straightforward: Raw Spread = Ask Price (interbank) – Bid Price (interbank) Then, the broker adds a commission, typically:- $3.5 per lot per side, or
- $7 per round-turn per lot
Raw vs. Other Spreads
| Spread Type | Markup | Commission | Spread Size | Transparency |
|---|---|---|---|---|
|
Raw |
None |
Yes |
0.0 – 0.3 |
High |
|
Fixed |
Yes |
No |
1.5 – 3.0 |
Medium |
|
Variable |
Yes |
No |
0.1 – 2.5 |
Medium |
How Raw Spreads Work in Forex Accounts
Raw Spread Trading Account Explained
A raw spread account offers direct market access. Instead of inflating the spread, brokers charge a commission on top of the interbank price. These accounts are typically offered by ECN (Electronic Communication Network) or STP (Straight Through Processing) brokers.
How Brokers Offer Raw Spreads
- No dealing desk—orders are passed straight to liquidity providers.
- Interbank pricing—you see what institutional traders see.
- Commission-based model—they profit from volume, not markup.
Why Raw Spreads Can Be Close to Zero
Because you’re viewing the unfiltered market price. In liquid conditions (like the London session), raw spreads can drop to 0.0 pips.
Raw Spread vs Standard Account
Raw Spread Account
- Tighter spreads
- Commission charged per lot
- Ideal for scalping, high-frequency trading
Standard Account
- Wider spreads (includes broker markup)
- No separate commission
- Simpler pricing model, preferred by beginners
Pros and Cons of Trading with Raw Spreads
Advantages of Raw Spread Accounts
- Lower Trading Costs: Especially for scalpers.
- Market Transparency: True pricing, no broker interference.
- Better Execution: Especially with fast-moving markets.
Disadvantages of Raw Spread Accounts
- Commission Fees: Can add up with frequent trading.
- Volatility Sensitivity: Spreads may widen under stress.
- Less Beginner-Friendly: Requires a more detailed understanding.
Why Traders Prefer Raw Spread Accounts
- High-Frequency Trading Compatibility: Minimal costs per trade.
- Expert Advisors (EAs): More accurate modeling with tighter pricing.
- Professional Environment: Reflects real market liquidity.
Raw Spread vs Fixed Spread: Which Is Better
Use Case Comparison
| Scenario | Better Option |
|---|---|
|
Scalping |
Raw Spread |
|
News Trading |
Fixed Spread |
|
Night Trading (low liquidity) |
Fixed Spread |
|
High-Frequency EA Trading |
Raw Spread |
Spread Behavior During Volatility
- Raw Spreads: Can widen drastically.
- Fixed Spreads: Stay stable but may have delayed execution.
Top Forex Brokers Offering Raw Spreads
IC Markets – Raw Spread Leader
- Spreads from 0.0 pips
- Commission: $3.5 per side
- Platforms: MT4, MT5, cTrader
Fusion Markets
- Low commissions
- Great for algorithmic trading
- Tight spreads
TMGM
- Institutional liquidity
- Fast execution
- Integrated VPS services
| Broker | Spread (min) | Commission | Platforms |
|---|---|---|---|
|
IC Markets |
0.0 pips |
$7/RT |
MT4, cTrader |
|
Fusion Markets |
0.1 pips |
$4.5/RT |
MT4, MT5 |
|
TMGM |
0.0 pips |
$7/RT |
MT4 |
Commission Charges in Raw Spread Accounts
- Typical Cost: $3.5 per side per lot ($7 round-trip)
- Compared to Standard: Often still cheaper when added to low spreads
- Transparency: You know exactly what you’re paying
How to Reduce Spreads in Forex Trading
- Choose Raw Spread Brokers: Look for IC Markets or Fusion Markets.
- Trade During High Liquidity: London and NY overlap = best spreads.
- Use ECN Accounts: Direct market access = better pricing.
- Avoid News Events: Spreads often spike during high volatility.
Conclusion
Choosing the right spread type can make or break your trading performance. For precision-driven traders—scalpers, EAs, and high-frequency pros—raw spread accounts offer unmatched transparency and tighter control over costs. While commissions exist, the real pricing power of raw spreads often outweighs the simple convenience of standard accounts. Whether you’re looking to reduce trading costs or upgrade to a more professional trading model, understanding the raw spread in forex is a critical step in your evolution as a trader.
FAQ
How Many Pips Is a Spread?
Typically between 0.0 and 3.0 pips, depending on the pair and account type.
Why Does the Spread Increase at Night?
Liquidity dries up—fewer buyers and sellers means wider spreads.
What’s the Difference Between Spread and Commission?
- Spread: Built into price difference.
- Commission: Separate fee (only on raw accounts).
