Spreads are the primary cost of trading forex with IG Markets. This guide explains exactly how IG's spread structure works, how to calculate your trading costs, real-world examples, and the risk management principles every IG trader should know.
A forex spread is the difference between the bid (sell) price and the ask (buy) price of a currency pair. It represents the cost of executing a trade and is typically measured in pips. On IG Markets, as with most brokers, the spread is the primary fee for opening and closing positions.
According to the Bank for International Settlements (BIS) Triennial Central Bank Survey, the forex market handles over $7.5 trillion in daily turnover, and spreads are a key component of transaction costs. IG Markets, as one of the world's largest retail forex brokers, offers dynamic spreads that reflect real-time liquidity conditions.
The bid is the price at which you can sell the base currency, and the ask is the price at which you can buy it. The spread is the difference: ask − bid = spread. On IG, spreads are variable and displayed live on the trading platform.
IG Markets primarily offers variable spreads, which fluctuate based on market liquidity, volatility, and time of day. During periods of high liquidity (e.g., London-New York overlap), spreads tend to tighten. During news events or low-liquidity sessions, spreads can widen. Fixed spreads are not generally offered on IG's standard accounts.
Every trade you open on IG must first overcome the spread before you break even. For a day trader or scalper, even a fraction of a pip difference can significantly impact profitability over hundreds of trades. The Commodity Futures Trading Commission (CFTC) highlights that trading costs, including spreads, are a critical factor in retail forex outcomes.
IG Markets offers a transparent spread structure that varies by account type, currency pair, and market conditions. Understanding how IG calculates and displays spreads helps you anticipate costs more accurately.
IG provides two primary pricing models. The spread-only account includes the cost of the trade within the spread itself, with no additional per-trade commission. The commission-based account (available in some jurisdictions) offers raw spreads from liquidity providers plus a fixed commission per lot. The choice depends on your trading style and volume.
According to NFA and CFTC investor education materials, traders should always compare total costs—spreads plus commissions—across account types to determine the most cost-effective option for their trading frequency.
IG's spreads are tiered by currency pair type. Major pairs (EUR/USD, GBP/USD, USD/JPY, etc.) generally have the tightest spreads due to high liquidity. Minor pairs and exotic pairs have wider spreads reflecting lower trading volume and higher market-making risk.
The tightest spreads on IG typically occur during the London-New York overlap (1:30 PM to 5:00 PM GMT) when liquidity is at its peak. The Asian session often sees moderately wider spreads, while the quietest periods (late US afternoon to early Asia) may show the widest spreads.
Spreads on IG are dynamic and can change rapidly. Always check the live spread displayed on your IG trading platform before placing an order. Past spread levels are not indicative of future spreads.
Knowing how to calculate spread costs is essential for managing your trading budget. This section breaks down the formula and provides a clear method to determine the exact cost of each trade on IG.
The total spread cost for a trade is calculated as:
Spread Cost = (Spread in pips) × (Pip value per lot) × (Number of lots)
Pip value depends on the currency pair and the lot size. For pairs where the U.S. dollar is the quote currency (e.g., EUR/USD, GBP/USD), one pip on a standard lot (100,000 units) is worth approximately $10. For a mini lot (10,000 units), it is about $1, and for a micro lot (1,000 units), about $0.10.
For pairs where the USD is the base currency (e.g., USD/JPY, USD/CAD), the pip value in USD depends on the current exchange rate and requires an additional calculation.
Suppose you trade 1 standard lot of EUR/USD on IG with a spread of 0.8 pips.
This $8 cost is incurred immediately when you open the trade. If the trade moves in your favor by 10 pips, your net profit would be $100 minus the $8 spread cost, plus any swap/rollover adjustments.
IG displays the current spread prominently on its platforms. The spread cost is effectively the difference between the buy and sell prices shown in the order ticket. Always review the live price before confirming any trade.
These examples illustrate how spread costs impact real trades on IG Markets across different account types and pair categories.
A day trader using a spread-only IG account opens 2 mini lots (20,000 units) of EUR/USD. The displayed spread is 0.9 pips. The pip value per mini lot is approximately $1. Spread cost = 0.9 × $1 × 2 = $1.80. The trader closes the position after a 12-pip move, netting $24 gross profit minus $1.80 spread cost = $22.20 profit.
A swing trader uses a commission-based IG account to trade GBP/JPY. The raw spread is 1.2 pips, and the commission is $6 per standard lot round turn. The trader opens 0.5 standard lots. Spread cost = 1.2 × (approx. $9.20 pip value for GBP/JPY) × 0.5 ≈ $5.52. Commission = $6 × 0.5 = $3. Total cost = $8.52. The trader holds the position for three days, earning a 45-pip profit.
According to the Federal Reserve and BIS reports on foreign exchange market structure, spreads are a reflection of market liquidity and risk. IG's pricing model aligns with these industry norms. Always check CFTC and NFA educational resources for guidance on understanding transaction costs.
| Currency Pair | Typical Spread (pips) | Spread Cost per Standard Lot (USD) | Pair Type |
|---|---|---|---|
| EUR/USD | 0.6–1.0 | $6–$10 | Major |
| GBP/USD | 0.8–1.4 | $8–$14 | Major |
| USD/JPY | 0.7–1.2 | $7–$12 | Major |
| EUR/GBP | 1.2–1.8 | $15–$23 | Minor |
| GBP/JPY | 1.8–3.0 | $17–$28 | Minor |
| USD/TRY | 8.0–15.0 | $80–$150 | Exotic |
Typical spread ranges shown for illustrative purposes. Actual spreads on IG vary by market conditions, time of day, and account type. Always check live spreads on the IG platform.
Not all spreads are equal. Evaluating IG's spread offering against your trading style, frequency, and pair selection is essential for effective cost management.
Scalpers and day traders who make many trades per day are more sensitive to spread costs. For these traders, even a 0.2-pip difference can have a significant impact on daily P&L. IG's tighter spreads during peak hours can benefit high-frequency traders.
Larger position sizes multiply the spread cost. A 2-pip spread on 5 standard lots costs $100 per round turn. Traders using larger sizes should consider commission-based accounts where raw spreads are lower.
Major pairs offer the lowest spread costs on IG. If you primarily trade exotics, be prepared for significantly higher costs that can erode profitability.
Spreads on IG vary by session. Evaluate whether your trading hours align with the most liquid periods to benefit from tighter spreads.
| Pair | IG Markets (Typical) | Industry Average | IG Positioning |
|---|---|---|---|
| EUR/USD | 0.6–1.0 pips | 0.8–1.2 pips | Competitive |
| GBP/USD | 0.8–1.4 pips | 1.0–1.6 pips | Competitive |
| USD/JPY | 0.7–1.2 pips | 0.9–1.4 pips | Competitive |
| EUR/GBP | 1.2–1.8 pips | 1.4–2.2 pips | Competitive |
| GBP/JPY | 1.8–3.0 pips | 2.0–3.5 pips | In line |
Industry averages are estimates based on publicly available broker data. Actual spreads vary. According to FINRA investor education, comparing spreads across brokers is a key step in due diligence.
Spread data changes in real time. Always refer to the IG Markets platform for current spreads. Consult the NFA BASIC system and the CFTC website for regulatory information about brokers and trading costs.
Many traders misunderstand how spreads work, leading to poor trading decisions. Here are the most common misconceptions about IG Markets forex spreads.
The CFTC advises retail traders to fully understand all costs associated with forex trading, including spreads, commissions, and swap rates. Many traders underestimate the impact of transaction costs on long-term profitability.
Managing spread costs is an integral part of overall risk management. These practices help you control the impact of spreads on your trading performance.
Factor spread costs into your position sizing calculations. If your risk per trade is $100, and the spread cost is $8, your effective risk exposure is $108. Adjust your position size accordingly.
Avoid opening trades during economic news releases, market opens, or illiquid periods when spreads are widest. Use limit orders to enter at specific levels, which can help you avoid adverse spread spikes.
Always set stop-loss orders. During volatile periods, spreads can widen significantly, causing slippage. A stop-loss helps protect against runaway losses even if the spread widens unexpectedly.
IG offers guaranteed stop-loss orders (available for a premium) that ensure your position is closed at your specified price, regardless of market gapping or spread widening. This can be a valuable risk management tool during volatile periods.
Forex trading on IG Markets involves significant risk of loss. Spreads, commissions, and swap rates are variable and can impact profitability. According to the CFTC and NFA, the majority of retail forex traders lose money. This guide is for educational purposes only and does not constitute financial, legal, or tax advice. Always verify current spreads, fees, and account terms directly with IG Markets and consult the relevant regulatory authority in your jurisdiction before trading.
IG Markets offers variable spreads that fluctuate with market conditions. For major pairs like EUR/USD, spreads can be as low as 0.6 pips during peak liquidity hours, but may widen during volatile periods. Always check the live spread on the IG platform before trading.
IG offers two pricing models: spread-only accounts with no commission, and commission-based accounts with raw spreads. The commission model typically applies to certain account types and jurisdictions. Verify the fee structure for your specific IG account.
IG is known for competitive spreads, often in line with or tighter than industry averages for major pairs. However, spreads vary by pair, account type, and market conditions. The BIS Triennial Survey indicates that spreads are generally tighter for the most liquid pairs.
Yes, spreads on IG Markets typically widen during high-impact news releases and periods of low liquidity. This is a standard market practice. Traders should exercise caution and use limit orders during volatile periods.
Spread cost is calculated as: (spread in pips) × (pip value per lot) × (number of lots traded). For example, on EUR/USD with a 0.8-pip spread and a standard lot, the cost is approximately $8 per round turn.
IG Markets primarily offers variable spreads that adjust to market conditions. Fixed spreads are not a standard offering on most IG accounts. Always confirm current pricing with IG directly.
The minimum deposit varies by region. For example, in the UK it is typically £250, while in Australia it may be $500. However, you can start with smaller amounts in some jurisdictions. Check IG's official website for current requirements in your country.
IG offers spreads that are generally consistent across their platform ecosystem, but execution and pricing may vary slightly between the web platform, mobile app, and MetaTrader 4. Some platforms may offer slightly different pricing due to liquidity arrangements.