Spread Comparison by Account Type: Which Is Better — Variable or Fixed?
In FX trading, “spread” is directly linked to trading costs. However, surprisingly few people accurately understand what a spread really is or whether a variable or fixed type suits them better. This article clearly explains the advantages and disadvantages of both types — referencing account types offered by major brokers — in about 2,000 words. At the end, you’ll also find a quick comparison checklist to help you choose the best option for your trading style.
We also have another article comparing spreads across overseas FX accounts. Feel free to check that out as well.
1. What Is a Spread — The “Actual Fee” in FX
A spread refers to the difference between the buy price (Ask) and sell price (Bid) — essentially, the transaction fee. For example, if USD/JPY is quoted as “Bid 155.000 / Ask 155.003,” the spread is 0.3 pips, or 0.003 yen. Even for the same currency pair and moment, spreads vary by account type, meaning “which account you use” directly affects your profits.
2. Types of Spread Settings
| Type | Description | Typical Users |
| Variable Spread | Changes in real time depending on market liquidity and volatility. Popular among ultra-short-term traders such as scalpers. | Day traders, EA users |
| Fixed Spread | Remains constant most of the time, though it may widen during major market events. Favored by mid- to long-term traders who value predictable costs. | Part-time traders, beginners |
3. Variable Spreads: Advantages and Cautions
- Extremely tight minimum levels
During regular European and New York sessions, spreads as low as 0.1–0.2 pips on USD/JPY are possible — a great advantage for advanced traders who trade frequently. - Reflects true market conditions
Spreads naturally widen during low-liquidity periods, reducing artificial rejections and improving reliability for algorithmic trading. - Note: Sharp widening during news releases
Spreads can jump from 0.1 pips to over 3.0 pips right after major announcements like Non-Farm Payrolls. Be prepared for slippage if stop orders execute at less favorable prices.
4. Fixed Spreads: Advantages and Cautions
- Note: Slightly wider under normal conditions
Even in low-volatility periods, fixed spreads remain constant, making day-to-day costs higher than variable types. - Easy to calculate costs
With predefined settings such as 0.3 pips for USD/JPY and 0.5 pips for EUR/JPY, profit and loss calculations are simple — ideal for part-time traders checking positions between work hours. - Stable even in volatile markets
Some brokers set an upper limit such as “published spread + α,” which helps reduce the risk of margin calls during server slowdowns or volatility spikes.
5. Spread Comparison Simulation by Account Type
Case Study
- Average trade size per transaction: 100,000 units
- Monthly trading frequency: 200 trades
- USD/JPY spread: Variable 0.2 pips (avg.), Fixed 0.3 pips
- Variable: 0.2 pips × 100,000 units × 200 trades = ¥40,000
- Fixed: 0.3 pips × 100,000 units × 200 trades = ¥60,000
The difference is ¥20,000 per month. While scalpers might favor variable spreads, note that risks such as “unexpected ¥100,000 loss due to widening during news” also exist. The key factors are your “risk tolerance” and “trading hours.”
6. Checklist: Which One Suits You?
- Trade mainly between 21:00–02:00 (weekday nights) → Choose variable for the tightest spreads
- Trade mostly during daytime or early morning → Choose fixed to avoid widening risks
- Avoid trading during major news → Either works; variable preferred if minimizing average cost
- Using EAs (automated systems) 24/7 → Decide after testing execution performance (compare via Myfxbook, etc.)
- Beginners with under ¥500,000 capital → Start with fixed to build cost awareness
7. Summary
Mastering one of the most crucial FX trading costs — the spread — is key to improving long-term performance. When comparing variable and fixed spreads, focus on three main factors: trading style, time zone, and risk tolerance.
If you’re a short-term trader where “1 pip can make or break profits,” aim for the tightest variable spreads and strictly close positions before major news releases. Conversely, if you trade medium- to long-term, choose fixed spreads for transparent costs and a calmer environment less influenced by emotion. A spread is more than a number — it’s part of your trading strategy. Select the account type that fits you best, minimize unnecessary costs, and take one step ahead in the vast FX market.