Variable Spread
Trading Costs
A variable, or floating, spread widens and narrows with market liquidity and volatility, typically at its tightest during active trading sessions and wider around major news events or thin liquidity.
What is a variable spread?
A variable spread, also called a floating spread, is a spread that changes continuously in line with real market conditions rather than staying fixed at one level. As liquidity and volatility shift throughout the trading day, the gap between bid and ask widens or narrows to reflect how easy — or costly — it currently is for the broker’s liquidity providers to fill orders.
This is the standard pricing model on ECN and STP account types, which pass through live pricing from external liquidity providers rather than quoting an internally fixed price.
How it behaves in practice
Variable spreads are typically at their tightest when multiple major trading sessions overlap and liquidity is deepest — for instance, during the London and New York session overlap for EUR/USD — and tend to widen during quieter hours, around major scheduled news releases, or in less liquid pairs.
As an illustrative example of this general pattern: EUR/USD might trade at a very tight spread of around 0.5–1 pip during peak liquid hours, then widen noticeably — potentially several pips or more — for a brief period around a high-impact release such as a central-bank rate decision, before settling back down once the market absorbs the news. Exact figures vary constantly and by broker, so these numbers are illustrative rather than a guarantee of any specific spread at any moment.
Why it matters
Variable spreads mean the true cost of a trade isn’t always the same as the “typical” or advertised figure — it depends on when you trade. This matters most around high-impact economic calendar events, where a sudden widening can turn what looked like a tight-spread trade into a much more expensive one, and can also increase the risk of slippage on market orders. Traders who are sensitive to cost, such as scalpers, often plan their trading around the hours when variable spreads are historically tightest and avoid entering new positions in the seconds before major scheduled news.
Quick recap
- A variable spread floats with real-time market liquidity and volatility.
- Standard on ECN/STP account types.
- Tightest during high-liquidity session overlaps, widest around major news or thin liquidity.
- Always factor in potential spread widening, not just the advertised “from” figure, when planning trades around news events.