7 min read A fixed spread stays the same number whatever the market does. A floating spread, also called variable, moves with liquidity and volatility. Fixed gives you certainty; floating gives you a tighter average cost with the risk of sudden widening. Which is better comes down to how, and when, you trade.
Fixed vs floating at a glance
| Feature | Fixed spread | Floating (variable) spread |
|---|---|---|
| Behaviour | Constant number of pips | Changes tick by tick |
| In news and volatility | Holds, but may requote | Widens, sometimes sharply |
| Average cost | Higher baseline | Lower most of the time |
| Transparency | Set by the broker | Reflects the real market |
| Usual model | Market maker / dealing desk | ECN / STP / no dealing desk |
| Best for | Predictability, beginners, news traders | Active traders in liquid hours |
What a fixed spread is
A fixed spread is quoted as a constant number of pips, say 2 on EUR/USD, and it stays there whether the market is dead quiet or running hot. The broker, usually on a dealing-desk or market-maker model, absorbs the market’s swings and prices that risk into the number. The payoff is certainty. You know your entry cost before you click, which keeps break-even math simple and means a headline can’t blow your cost out the instant it drops. If the idea of a bid-ask gap is new, start with what a spread is, or the forex spread in detail.
The catch sits in two places. You pay for the certainty with a wider baseline: when the market is calm, a fixed spread is usually higher than a floating one would be in the same moment. And “fixed” has limits. In genuinely fast markets some brokers requote, asking you to accept a new price, or briefly stop taking orders, so the spread stays fixed even as your execution doesn’t.
What a floating spread is
A floating spread changes in real time with the market’s own bid and ask. It’s the norm on ECN, STP, and raw-style accounts that stream prices from several liquidity providers, so the number reflects the actual interbank market. When liquidity is deep, during the London and New York overlap, a floating spread on a major pair can sit near a fraction of a pip. When liquidity thins or volatility spikes, the same spread widens to cover the risk, sometimes to several pips, occasionally far more around major news. You get the real market’s price, cheaper than fixed most of the time, in exchange for living with its swings.
The real trade-off: predictability vs cost
Strip away the labels and the choice is one thing: do you want a known cost or a low one? Fixed buys predictability and usually costs more on average. Floating buys a lower average and usually hands you unpredictability. The two even fail differently in a fast market. A fixed-spread broker holds the spread but may requote you. A floating-spread broker fills you, but at a spread that has suddenly gone wide, often with slippage on the price on top.
There’s a structural footnote worth knowing. Fixed spreads come from market makers taking the other side of your trade, which is exactly where the question of how a broker makes its money, and whether its interests line up with yours, starts to matter. Either way, the spread is only part of the bill; weigh it against commission and overnight costs as one all-in figure.
Which should you choose
Match the spread type to how you trade, not to which sounds cheaper.
Fixed tends to suit newer traders who want simple, predictable costs, small accounts that can’t absorb a sudden cost spike, and anyone building a strategy around news releases, where floating spreads punish you at the exact moment you want to act. Floating tends to suit active, cost-sensitive traders, especially scalpers and day traders working the liquid sessions where it runs tightest, and anyone happy to pay the real market rate and manage the widening with discipline. A scalper chasing a few pips feels every half-pip, so the lower floating average usually wins, as long as they stay out of the news minutes. A longer-term trader barely notices the entry spread either way and should pay more attention to swap.
One practical catch
Most brokers offer one model or the other on a given account, not both, and you can’t flip between them mid-trade. So this is really a choice of account, made before you fund it. The honest way to decide is to test both on a demo with your own instruments and your own trading hours, track the average and the worst-case spread rather than the advertised one, and commit after a month of real data.
Trade forex, gold, indices, and crypto on PrimeXBT from one account, or read how the platform approaches its spreads.
Trading involves risk.
Are fixed or floating spreads cheaper?
Floating spreads are usually cheaper on average, especially during liquid sessions when they can run very tight. Fixed spreads carry a higher baseline because the broker prices in the risk of holding the spread steady. The exception is volatile or news-driven moments, when a floating spread can briefly cost far more.
Do fixed spreads ever change?
Mostly they hold, which is the point. But in extreme volatility or very thin markets, some brokers widen a "fixed" spread temporarily or stop accepting new orders, and many will requote you rather than fill at the quoted price during fast moves.
Why do floating spreads widen?
Because they track real liquidity. When fewer buyers and sellers are active, around major news, at session changeovers, or in thin overnight hours, the gap between bid and ask grows to cover the added risk, then narrows again when conditions calm.
Which is better for scalping?
It depends on when you scalp. During the liquid London and New York overlap, a floating spread is usually tighter and better for a scalper counting every pip. If you scalp in thin hours or around news, a fixed spread's predictability can be safer.
Can you switch between fixed and floating spreads?
Usually not on the same account. Brokers tend to tie the spread type to the account model, so switching means opening a different account rather than toggling a setting.
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