Spreads and commissions: what a trade really costs

Two ways brokers charge you

Every broker needs to make money on your trades. They do it one of two ways:

• Spread-only ("Standard" accounts): the broker adds a markup to the spread and charges no commission. Simple, but the markup is invisible.
• Raw spread + commission ("Razor", "Raw", "ECN" accounts): you get the market spread, often close to zero, and pay a fixed commission per lot, usually $6–7 round turn.

The all-in cost formula

To compare the two fairly, reduce both to one number:

All-in cost per standard lot = (spread in pips × $10) + round-turn commission

Example A — Standard account, 1.6 pip spread, no commission: 1.6 × $10 = $16 per lot.

Example B — Raw account, 0.1 pip spread, $7 commission: 0.1 × $10 + $7 = $8 per lot.

Account B is half the price, even though "no commission" sounds cheaper. This is the number we publish for every broker.

When spread-only makes sense

If you trade rarely and in small size, the difference is a few dollars a month and the simplicity may be worth it. Once you trade several lots a week, the raw account pays for itself quickly.

Watch for the other fees

• Swap (overnight financing) if you hold positions past 5pm New York
• Deposit/withdrawal fees and currency conversion
• Inactivity fees

The cost of skipping this

A trader doing 20 lots a month on a $16 account instead of an $8 account pays an extra $1,920 a year for the same trades.