When choosing a forex broker, one of the most important factors to consider is the spread—the difference between the bid and ask price of a currency pair. Brokers typically offer fixed or variable (floating) spreads, and each comes with advantages and trade-offs depending on your strategy, risk tolerance, and market conditions. In this guide, we explore what to know about forex brokers that offer fixed and variable spreads to help you make an informed decision.

What Are Fixed Spreads?

Fixed spreads remain constant regardless of market volatility. For example, a broker may offer a fixed 2-pip spread on EUR/USD, even during high-impact news events.

Advantages of Fixed Spreads:

• Predictable cost per trade – easy to calculate your expenses in advance
• No slippage caused by widening spreads
• Ideal for beginners and traders who avoid volatile periods

Drawbacks of Fixed Spreads:

• Typically wider than variable spreads under normal market conditions
• Requotes may occur, especially during high-impact news events
• Often used by market makers, which may create a conflict of interest

Fixed spread brokers are best for traders who prefer stability and want to avoid the uncertainty of rapid spread fluctuations.

What Are Variable (Floating) Spreads?

Variable spreads change constantly depending on market conditions, such as liquidity, volatility, and trading volume. During calm periods, they can be extremely tight—often under 1 pip.

Advantages of Variable Spreads:

• Lower average cost during periods of high liquidity
• Tighter spreads available on major currency pairs
• Often provided by ECN or STP brokers with no dealing desk intervention

Drawbacks of Variable Spreads:

• Widen during volatility, such as news releases
• Can result in higher-than-expected costs
• Harder to predict trade expenses, which may impact short-term strategies like scalping

Variable spread brokers suit experienced traders who are comfortable adapting to market shifts and value lower average costs over time.

How to Choose Between Fixed and Variable Spread Brokers

When comparing brokers, consider the following:

1. Your Trading Style

• Scalpers and day traders often prefer tight variable spreads during high-volume periods.
• Swing traders or longer-term traders may not mind small fluctuations in spread and can benefit from tighter average costs.
• News traders might favour fixed spreads to avoid unexpected spread widening—though execution delays may still occur.

2. Market Conditions You Trade In

• If you trade primarily during Asian or late US sessions, when markets are less volatile, variable spreads will likely be more favourable.
• If you regularly trade during major news events, fixed spreads may offer more predictability—though execution risk still exists.

3. Broker Transparency and Execution Quality

• Fixed spreads often come from market makers, so be sure the broker is well-regulated and transparent about their execution policy.
• Variable spread brokers should disclose their liquidity providers, average spreads, and whether they offer ECN, STP, or hybrid models.

4. Cost Comparison Over Time

Run a demo or real account to:

• Monitor average spreads across currency pairs
• Compare cost stability across different times of day
• Identify which model suits your strategy’s frequency and trade size

Some brokers even offer dual account types, letting you choose between fixed or variable spreads depending on your preferences.

What to Watch Out For

• Hidden commissions: Some brokers advertise tight variable spreads but offset them with high commissions.
• Spread manipulation: Choose only regulated brokers that are audited for fair execution.
• Misleading marketing: “Zero spread” accounts often come with conditions or high commission charges.

A broker that clearly discloses its pricing model and fees, including during volatile sessions, is the one to trust.

Conclusion: Know Your Costs, Know Your Broker

Understanding what to know about forex brokers that offer fixed and variable spreads helps you align your trading style with the most cost-effective model. Whether you value predictability or are chasing lower average costs, your broker’s spread structure directly affects your profitability.

Choose a broker that not only offers favourable spreads but also full transparency, reliable execution, and clear support—because in forex, every pip counts.