Essentially, Currency trading is characterized by levels of access that is determined by the amount of trade that could be generated. The higher the amounts traded the fewer forex pips worth of spread that will be generated. The top tier of currency trading, the interbank level, consists of the trading houses and investment banks that do the most foreign exchange trading. At the amounts these financial giants trade, the spread of forex pips is typically reduced to nothing. For less popular currencies, it is usually 0-1 pips. Major currencies like the US dollar and the Euro typically have 2-4 spreads of forex pips; incredibly tiny considering the spread offered by most banks and exchange offices.
A common ploy by fraudulent firms is to offer spreads of forex pips typically available only to the interbank level. In many cases they often run away with the money of their victims. One should be especially wary of companies that promise to offer tiny pip spreads. Small pip spreads are typical only of the trading between large institutions.
Currently, interbank currency trade spreads for the EUR/USD, the most commonly traded currency pair, is at 3 pips as a general trend. If an average individual were to make a similar trade using an ordinary bank account, it would likely be between 200 and 500 pips. An exchange institution will be even more unfavorable, offering a spread of 750-2500 forex pips.
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