What Are Raw Spreads In Forex Trading?

Author: The Forex Geek | Published: May 24, 2026

Introduction to Forex Spreads

In the world of forex trading, understanding the different types of spreads is crucial for traders. A spread refers to the difference between the buying (ask) price and the selling (bid) price of a currency pair. This difference represents the cost of executing a trade and is one of the key elements in determining the profitability of a trade. In forex, there are different types of spreads, including fixed spreads, variable spreads, and raw spreads.

Raw spread is a specific type of spread that is highly sought after by serious traders. In this article, we will delve into what raw spreads are, how they work, the advantages and disadvantages of using them, and how traders can benefit from trading with raw spreads.

What is Raw Spread?

A raw spread in forex trading is the direct spread, also known as the “market spread” or “unmodified spread,” provided by the interbank market. The raw spread represents the pure difference between the bid and ask price of a currency pair, without any markup added by the broker. This type of spread is often seen as the most transparent and reflective of market conditions.

In a raw spread model, brokers do not add any additional costs to the spread. The spread is typically quite tight, especially in highly liquid currency pairs like EUR/USD or GBP/USD, and it can fluctuate based on market conditions. Raw spreads are generally narrower than the spreads offered in standard accounts and are usually accompanied by a small commission or fee per trade.

How Does Raw Spread Work?

To understand raw spreads better, it’s important to first review how forex spreads function in general. Every currency pair has two prices: the bid price and the ask price. The bid price is the price at which a trader can sell the base currency, while the ask price is the price at which the trader can buy it. The difference between these two prices is the spread.

In a raw spread account, the broker simply passes the price it receives from the market directly to the trader, without adding any extra markup. This means that the spread is determined purely by market conditions such as liquidity and volatility, and can vary throughout the day.

For example, if the bid price for the EUR/USD pair is 1.1050 and the ask price is 1.1052, the raw spread is 2 pips. The trader will pay a commission on each trade executed, but they are not paying any extra for the spread.

How Is Raw Spread Different from Other Types of Spreads?

There are three main types of spreads in forex trading: fixed spreads, variable spreads, and raw spreads. Here’s a comparison to clarify how raw spreads differ from the other types:

  • Fixed Spreads: Fixed spreads remain the same regardless of market conditions. This means the difference between the bid and ask prices is constant, regardless of how liquid or volatile the market is. Fixed spreads are typically offered by brokers who want to give traders certainty about the cost of a trade.
  • Variable Spreads: Variable spreads fluctuate depending on market conditions. In periods of low liquidity, such as when the market opens or during important news events, the spread can widen significantly. In more liquid conditions, the spread can tighten.
  • Raw Spreads: Raw spreads, on the other hand, represent the market’s natural spread and do not include any broker markup. These spreads are often the tightest and most transparent because they are directly sourced from the interbank market. However, brokers offering raw spreads usually charge a commission to make up for the lack of spread markup.

The key difference between raw spreads and the other types of spreads is that raw spreads are more reflective of true market prices, while fixed and variable spreads include extra costs for the trader. Raw spreads can be as low as 0 pips, but traders must be aware of the additional commissions that brokers charge.

Advantages of Trading with Raw Spreads

  1. Tighter Spreads: One of the primary benefits of raw spreads is that they are usually much tighter than fixed or variable spreads. Tighter spreads mean lower trading costs, which can increase a trader’s potential for profit. For example, a raw spread of 0.1 pips is much more advantageous than a fixed spread of 2 pips.
  2. Transparency: Raw spreads offer a high level of transparency because they are based on real-time market prices. Traders can see the exact price they are paying for a trade, without any hidden markups. This level of transparency is appealing to traders who want to know exactly what they are paying.
  3. No Slippage: Raw spreads, particularly during periods of high liquidity, can offer more consistent pricing, reducing the likelihood of slippage. Slippage occurs when there is a delay in order execution, and the price shifts unfavorably in the process.
  4. Better for High-Frequency Traders: Traders who make a large number of trades, such as scalpers or day traders, can benefit from raw spreads because the lower spreads allow them to execute more trades without accumulating significant costs. This is particularly advantageous for strategies that rely on very small profit margins.
  5. Direct Market Access: By trading with raw spreads, traders often have direct access to the interbank market, where liquidity is higher and prices are more accurate. This can lead to better overall trade execution.

Disadvantages of Trading with Raw Spreads

While raw spreads have many advantages, they are not without their disadvantages. Here are some of the challenges traders might face when using raw spreads:

  1. Commissions and Fees: Although raw spreads are tight, brokers usually charge a commission on each trade executed. This commission can vary from broker to broker and can sometimes make trading with raw spreads more expensive than expected, especially for traders who execute many trades.
  2. Variable Spreads: Raw spreads can fluctuate depending on market conditions. During periods of high volatility or low liquidity, spreads can widen, which can increase trading costs unexpectedly. For example, during major news events or at the open of a market session, the raw spread may widen significantly.
  3. Less Suitable for Beginners: Raw spread accounts can be more challenging for beginner traders because they require an understanding of the underlying market conditions and how to manage commissions and spreads effectively. Fixed spreads, on the other hand, are easier to understand since they don’t vary as much.
  4. Not Always Available on All Pairs: Not all currency pairs may have raw spreads available, especially exotic currency pairs or pairs with low liquidity. This means traders may not always be able to benefit from raw spreads across their entire portfolio.
  5. Potential for Higher Costs in Low-Volume Trading: Traders who trade less frequently may find that paying a commission on each trade is more expensive than simply paying a markup on a fixed or variable spread. For those who don’t trade in large volumes, raw spreads may not be the most cost-effective choice.

Who Should Use Raw Spreads?

Raw spreads are best suited for experienced traders who trade in high volumes and are comfortable managing the additional commission costs. Scalpers, who rely on small price movements, are particularly drawn to raw spreads because the narrow spread minimizes trading costs, allowing them to capture small profits more effectively. Additionally, day traders and institutional traders who need direct market access and tight spreads can benefit from raw spreads.

However, raw spreads may not be the best option for beginner traders or those who trade infrequently. New traders might struggle with the commission-based cost structure and the fluctuations in spread size. For those new to forex trading, fixed spreads or variable spreads may be more suitable because they offer more predictable costs.

How to Choose a Broker Offering Raw Spreads

When choosing a broker that offers raw spreads, it’s important to consider a few key factors:

  1. Reputation and Regulation: Choose a broker that is regulated by a reputable authority to ensure a secure and trustworthy trading environment. Look for reviews and ratings from other traders to gauge the broker’s reliability.
  2. Commission Structure: While raw spreads come with low spreads, brokers typically charge a commission per trade. Ensure you understand the broker’s commission structure and how it affects your overall trading costs.
  3. Liquidity and Trading Hours: Check the liquidity available with the broker, especially during off-peak hours when spreads tend to widen. The broker should offer stable pricing and consistent execution, even during periods of high volatility.
  4. Trading Platform: Ensure the broker provides a reliable trading platform with the necessary tools and features to analyze the market and execute trades quickly. Many brokers with raw spreads offer platforms like MetaTrader 4 or 5, which are popular among traders.

Conclusion

Raw spreads in forex trading offer a highly transparent and cost-effective way to trade, especially for active traders who make frequent trades or use scalping strategies. With lower spreads and the potential for direct market access, raw spreads can provide a significant advantage in terms of trading costs. However, the commissions associated with raw spreads and the potential for variable spreads may not be ideal for all traders, especially beginners. As such, raw spreads are best suited for experienced traders who are familiar with the dynamics of the forex market and are capable of managing the associated costs.

By understanding how raw spreads work, traders can make informed decisions about which type of spread to choose based on their individual trading goals and strategies.