Spreads – Austin Pips

Forex Spreads

Tight Spreads as Low as 0.1 Pips

Tight Spreads from as Low as 0.1 Pips

Over 1,000 Financial Instruments to Trade

Trade with Zero Hidden Fees

The Lowest Spreads Across All Account Types

Best Execution Policy

What is Spread in Forex ?

Why Does Spread Matter ?

The spread in Forex refers to the difference between the ask and bid prices of a currency pair. It’s how brokers make a profit, and it represents your trading cost. A tight spread means lower trading costs, giving you more value for every trade you make.

In Forex, ultra-competitive spreads are essential for maximizing your profit potential. At Austin Pips, we offer some of the tightest spreads in the industry, starting as low as 0.1 pips, reducing your overall cost of trading. Our deep liquidity pool, built from strategic partnerships with leading banking and non-banking financial institutions, ensures that we consistently provide low-cost spreads, so you can trade with confidence.

How Spread Affect ? Your Trades

Experienced traders know that spread changes can significantly impact trading decisions. Keeping a close eye on spread fluctuations is essential, as even slight changes can influence your profitability.

What Are High Spreads?

High spreads often signal low liquidity or high market volatility. For example, non-major forex pairs typically have wider spreads than major pairs due to lower trading volume. At Austin Pips, we ensure that our spreads remain competitive, even during volatile periods.

What Are Low Spreads?

Low spreads usually reflect high market liquidity or low volatility. This often occurs during major Forex sessions when trading activity is at its peak. At Austin Pips, we take advantage of these conditions to offer you consistently tight, low-cost spreads.

What is Spread in Forex?

In Forex trading, the spread is the difference between the bid price (the price at which you can sell a currency) and the ask price (the price at which you can buy it). This cost, measured in pips, is one of the most important concepts for any trader to understand, as it represents the cost of entering a trade. Popular currency pairs such as EUR/GBP and USD/AUD typically have lower spreads due to higher market liquidity. For example, if the EUR/USD is quoted at 1.1251/1.1252, the spread is 0.0001, or 0.1 pips. The pip value in USD-based pairs is usually identified at the fourth decimal place. Traders calculate their spread cost by multiplying the pip value by the number of lots being traded. For instance, a standard lot (100,000 units) with a 1 pip spread typically costs $10. If your account is denominated in another currency, such as GBP, you would need to convert this amount accordingly.

Spreads vary based on multiple factors, including market liquidity, volatility, news events, and the time of day. Generally, tighter spreads occur during peak trading hours when markets are most active—such as during the London and New York sessions—while wider spreads are seen during low liquidity periods or volatile market conditions. High spreads are often associated with exotic currency pairs or when trading outside of regular market hours, like during the night in the currency’s home region. On the other hand, low spreads indicate high liquidity and low volatility, making them more favorable for traders, especially scalpers and intraday traders who rely on frequent trades.

Understanding spreads helps traders better manage their trading costs and improve overall profitability. A narrow bid-ask spread results in lower transaction costs, while a wider spread increases the cost of entering and exiting trades. Currency pairs involving major currencies tend to have tighter spreads, whereas emerging market currencies usually have wider spreads. Traders should also consider the best trading times to benefit from lower spreads, such as trading the AUD during active Australian market hours. At Austin Pips, we provide access to ultra-tight spreads across a wide range of currency pairs, giving you the competitive edge you need in the Forex market.

Spreads can widen considerably when the financial markets are volatile: a phenomenon known as slippage. It is also important to understand the difference between fixed and variable spreads. Fixed spreads remain the same, no matter what the market conditions are. Variable spreads keep on changing, based on the supply and demand of the instruments and the overall market volatility. Choosing the optimal spread type is important to keeping trading costs to a minimum. Retail traders who trade less frequently could benefit from fixed spreads while those who trade frequently and during peak market hours (when the spreads are the tightest), might prefer variable spreads. Variable spreads tend to be lower than fixed spreads, especially in calmer markets. Explore our wide range of forex account types.

The spread of a given currency pair provides valuable insight into market conditions such as time, volatility, and liquidity. Generally, emerging currency pairs tend to have wider spreads compared to major currency pairs due to lower liquidity and trading volume. There are eight major currencies that account for approximately 85% of total forex market turnover. Currency pairs involving these major currencies typically offer tighter spreads, thanks to higher trade volumes, more market makers, and real-time pricing. It’s also important to consider peak trading hours for each currency. For example, trading the Australian Dollar (AUD) may be more expensive during nighttime in Australia, as market participation is lower and key financial markets in the region are closed, reducing liquidity and widening spreads.

Forex Broker Spreads

Currency spreads in forex trading are quoted using two prices: the bid and the ask. The bid price is the rate at which you can sell the base currency, while the ask price is the rate at which you can buy the base currency. The difference between these two prices is known as the spread, and it represents the broker’s fee for facilitating the trade.

For example, if the EUR/USD bid/ask rate is 1.1251/1.1252, EUR is the base currency and USD is the quote currency. You can buy EUR at the higher ask price of 1.1252 and sell it at the lower bid price of 1.1251. The difference between these two prices is called the forex spread. In this case, the spread is 0.0001, which equals 0.1 pips—since the pip value for USD-based pairs is measured at the fourth decimal place.

To calculate the total spread cost, multiply the pip value by the number of lots traded. For example, if you’re trading 10,000 units of EUR/USD with a 1 pip spread, the cost would be $1.

In case you are trading a standard lot (100,000 units of the currency)

If your account is denominated in a currency other than USD, such as GBP, you will need to convert the spread cost from US Dollars to your account’s currency. Understanding forex spreads is crucial for traders, as they represent the primary cost of trading. The spread is an essential parameter to consider when choosing a broker, as it can significantly affect your trading expenses. At Austin Pips, we offer competitive spreads to help optimize your trading experience.

When you open and trade with an Austin Pips RAW ECN account, you gain access to some of the lowest spreads in the market. Our liquidity is sourced from leading liquidity providers, enabling us to offer you tight spreads starting as low as 0.0 pips during peak market hours. This level of pricing was once only available to hedge funds. You can always verify our competitive trading conditions by opening a demo account.

Understanding High and Low Forex Spreads

It’s important to note that forex spreads can fluctuate throughout the day due to several factors, such as liquidity, volatility, and market news. Major currency pairs like EUR/USD or GBP/USD, which tend to have higher liquidity, generally have lower spreads compared to emerging currency pairs like USD/JPY. Additionally, liquidity can decrease and spreads can widen ahead of major economic events or during transitions between trading sessions.

Stay informed by checking the economic calendar. Economic releases can cause significant price fluctuations, depending on whether expectations are met. If you’re holding a position when the spread widens, you might face a margin call. Spreads can also widen dramatically during periods of high market volatility—a phenomenon known as slippage.

Understanding the difference between fixed and variable spreads is crucial for optimizing your trading strategy. Fixed spreads remain constant regardless of market conditions, providing stability and predictability. On the other hand, variable spreads fluctuate based on supply and demand, as well as overall market volatility.

Choosing the right spread type can help minimize trading costs. Retail traders with smaller accounts who trade less frequently may benefit from fixed spreads, as they offer consistency. However, more active traders, especially those who trade during peak market hours when spreads are tightest, may prefer variable spreads. Typically, variable spreads are lower than fixed spreads, particularly in calmer market conditions.

Industry-Leading Low Forex Spreads at Austin Pips

Austin Pips offers variable spreads to ensure fast trade execution with minimal chances of requotes. Our liquidity is sourced from top international financial institutions, providing deep liquidity and real-time price quotes for various tradable instruments. This allows us to offer forex spreads as low as 0.0 pips on RAW ECN accounts and 1.0 pips on Standard STP accounts, giving you competitive pricing in all market conditions.