IC Markets
The spread is the gap between the buy and sell price, and it is the cost you pay on every trade. When it looks unusually wide, the cause is almost always one of a few things: the hour you are trading, the pair itself, the account type you chose, or a scheduled news event. This guide covers each, and how to lower the spread you actually pay.
1. The time of day
Spreads track liquidity. They are tightest when the major sessions overlap, roughly when London and New York are both open, and widest in the thin hours after New York closes and before Tokyo gets going. If you trade late at night in your time zone and that lands in the quiet window, the same pair that shows 0.8 pips in the afternoon can show 2 to 3 pips or more. Check the spread at the exact hour you trade, not the headline figure.
2. The pair
| Pair type | Typical spread | Why |
|---|---|---|
| Major (EUR/USD, USD/JPY) | 0.1 to 1.5 pips | Deepest liquidity |
| Minor / cross (EUR/GBP, AUD/NZD) | 1 to 3 pips | Less volume |
| Exotic (USD/ZAR, USD/TRY, USD/MXN) | several to tens of pips | Thin liquidity, higher volatility |
| Metals (XAUUSD) | 15 to 50 cents | Volatility and session-dependent liquidity |
If you moved from EUR/USD to an exotic or to gold and the spread jumped, that is expected. Exotic pairs and metals are structurally more expensive to trade.
3. Your account type
A standard account bundles the broker's cost into a wider spread and charges no separate commission. A raw-spread or ECN account shows a very tight spread, often near zero on majors, but charges a commission per lot. If you are on a standard account and comparing its spread to a raw-account advertisement, the standard spread will always look high. Compare like with like: standard spread versus raw spread plus commission.
4. News and events
In the seconds and minutes around a high-impact release, such as US CPI, a central bank decision, or the US jobs report, liquidity providers widen their quotes to protect against the sudden move. Spreads can go from 1 pip to 10 or 20 pips briefly, then settle. The daily and weekly rollover, around 5pm New York time, also produces a short spread widening as liquidity thins during the handover.
Lucía complained that her EUR/USD spread was 2.4 pips when reviews quoted 0.9. Her trading was at 1am local time, deep in the low-liquidity window, on a standard account. She moved to the London to New York overlap in the afternoon and switched to the broker's raw account with commission. Her all-in cost per trade roughly halved, and the spread she saw at the new trading hour was under 0.5 pips.
How to get a tighter spread
- Trade during the London and New York overlap, when liquidity peaks.
- Stick to major pairs if low cost is a priority.
- Use a raw-spread or ECN account if you trade actively, and compare spread plus commission, not spread alone.
- Stay out of the market in the minutes around high-impact news unless you are deliberately trading the event.
- Avoid the few minutes either side of the daily rollover.
A persistently wide spread on major pairs during liquid hours, well above what other regulated brokers show, is a reason to compare brokers. But a wide spread at 2am, on an exotic pair, on a standard account, or during a news release is normal market behaviour, not a broker fault.
Nine times out of ten, "my spread is too high" is a timing or account-type issue. People compare a standard account at midnight to a raw account advertised for the afternoon. Check the spread on your pair at your actual trading hour, then decide whether it is the market or the broker. Usually it is the market.
Frequently asked
Why is my forex spread higher than advertised?
Advertised spreads are usually the tightest figure, measured on a major pair during peak liquidity on a raw account. Your spread depends on the hour you trade, the pair, your account type, and whether a news event is near. Any of those can widen it well beyond the headline number.
When are forex spreads widest?
In the thin hours after the New York close and before the Tokyo open, around the daily rollover near 5pm New York time, and in the seconds to minutes around high-impact news releases.
Is a raw account cheaper than a standard account?
Often, once you add the commission. A raw account shows a near-zero spread plus a per-lot commission; a standard account shows a wider spread and no commission. Compare spread plus commission for your pair and trading hours to see which is cheaper for you.
Why is the spread on exotic pairs so wide?
Exotic pairs like USD/ZAR or USD/TRY have far less trading volume and higher volatility than majors, so liquidity providers quote a wider spread to compensate for the risk of holding the position.
Should I trade during news if the spread widens?
Only if trading the event is your deliberate plan. In the first minutes after a release the spread is at its widest and slippage is worst, so a normal-sized position with a normal stop is very likely to be stopped out on noise.