RAW/ECN Account Spread Testing

Why Is It So Important To Trade With Tight Spreads?

The spread is the amount your trade must move before you make a profit. For example, if you go long (buy) 1 lot (100,000) using Fusion Markets, your trade will need to rise by at least 0.22 pips before making any profit. The tighter the spread, the more profit you can make.

If your trading strategy relies on profits of just a few pips (e.g., scalping), or if you use are a high-volume trader, low spreads are critical to your success.

Average Spreads for Currency Pairs

In our tests, EUR/USD had the tightest spread, averaging 0.26 pips across all brokers.

EUR/USD consistently ranks as the world’s most traded pair (often accounting for a quarter of global FX volume), so this result is as we’d expect.

This table shows the average spread in pips, across all brokers, for the six major currency pairs we tested.

Tightest Spreads for each Currency Pair

Our tests also show the tightest spreads for each of the six currency pairs.
Fusion Markets ranks in the top three brokers for the tightest spreads for all currency pairs.

Blackbull Markets has the widest spreads for all currency pairs, except USDCAD, where Admiral Markets has a wider spread.

You can see how we compared Fusion Markets to other ASIC-regulated brokers on our lowest spread forex broker list. We also created a list of just FCA-regulated brokers on the lowest spread forex broker UK list.

What Factors Influence Spreads?

Factors that can influence the spreads offered by different brokers include

1. The currency pair being traded (as shown above)
2. The volume of trades in the currency pair being traded
3. The volatility of the currency pair being traded
4. The time of day the trade is made

Our tests show spikes in spreads around midnight Brisbane time. Midnight Brisbane time happens to be 2 PM London time and two hours into the New York Session. These wider spreads coincide with high volumes and high volatility.

Brokers with the most Stable Spreads

As traders, we don’t enjoy spikes in spreads like in the chart above. We’d much prefer the spreads to be stable regardless of the volumes traded, the time of day or the volatility. So, which are the brokers with the most stable spreads?

To measure spread stability for each broker, we calculated the highest spread spike for each broker, averaged across the currency pairs.

The table below shows that the top broker in our tests, Fusion Markets, also has the lowest spread spike, so it’s the best example of tight, stable spreads.

In contrast, City Index had an overall average spread of 0.25 pips, but the spread spiked to 7.88 pips during the times with the heaviest volumes of the day.

Our Testing Methodology For RAW/ECN Account Spreads

We used live “RAW/ECN” accounts (as opposed to “standard” or zero-commission accounts) for our testing.

The six major currency pairs – AUDUSD, EURUSD, GBPUSD, USDCAD, USDCHF and USDJPY were used to conduct our testing. We used hourly (H1) data over 24 hours.

To record the spreads, we used a freely available MT4 indicator, IceFX SpreadMonitor, that displays the current minimum, maximum and average spread values for a chart (currency pair). The indicator’s screen output looks like this on an AUDUSD chart for H1 (hourly) data:

The indicator also writes the results to CSV files, providing us with data to perform our analysis. A typical CSV (for AUDUSD data at Fusion Markets) looks like this:

Testing Time Zones of our Tests

We ran our tests across 24 hours from 2:00 PM on 25th March 2023 to 2:00 PM on 26th March 2023. These times are in the time zone UTC + 10, which aligns with Brisbane, Australia.

As we can see from the time zone converter by Baby Pips, 2:00 PM Brisbane has the lowest volume of all times during the forex day, meaning spreads should be at their lowest and most stable.

We ran our tests overnight, during the highest trading volumes and through all the major forex sessions – Sydney, Tokyo, London, and New York.

Tightest RAW Spread For UK and European Brokers

We focused on comparing the results of brokers regulated within Europe by the Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC) or other relevant regulators. We strongly recommend that European residences only choose brokers regulated for their region so in the UK residences should choose an FCA-regulated broker.

Here are the spread results of brokers regulated in Europe.

To provide further insights into just FCA-regulated UK brokers, the table shows the average spreads for the 6 currency pairs combined – indicating that City Index is on balance, the best broker for tight RAW spreads. The is followed by the spread average for each currency pair.

Best Forex Brokers UK

Do ECN Accounts Have Lower Fees Than Standard Accounts?

RAW/ECN accounts have tighter spreads than standard accounts for all brokers in our tests. For example, Fusion Markets’ Zero Account (with an average spread of 0.22) has an 82% tighter spread than its Standard Account (with an average spread of 1.19).

Published Raw Account Spreads

Each month the CompareForexBrokers team visits the websites and grabs the average published data by currency pair (which may exist in the product disclosure statement) and centralises it in the table below.

This data in April 2024 closely aligns with the tested data with the two best raw spread forex brokers based on pips being the following:

1. IC Markets (lowest published spreads, third lowest tested spread results)
2. Fusion Markets (third lowest published spreads, lowest tested spread results)