Commission per lot versus spread markup: a worked example

[FXS London Scalper]

A friend asked me why I prefer a raw spread account with commission. Here is the calculation I showed him, using typical numbers from my two accounts on EURUSD.

Account A, standard: average spread 1.1 pips during London, no commission. Cost per round lot: about 11 dollars.

Account B, raw: average spread 0.2 pips, commission 3.50 dollars per lot per side, so 7 per round trip. Cost: 2 dollars spread plus 7, so 9 dollars.

Difference: 2 dollars per lot. Small? I trade about 300 round lots a month, so that's 600 dollars a month.

But check two details:

• The raw account's spread widened more at 07:00 and around news in my logs. On those trades the gap shrinks.
• Some brokers quote commission per side, some per round trip. A 7 dollar "per lot" commission can mean either.

For scalpers with 3 to 5 pip targets, cost is about a quarter of the target, so it's worth measuring your own fills rather than trusting the brochure.

[Shadow Trader]

The pitch is always the same: raw spreads from 0.0 plus a commission versus a "commission-free" account with a bigger spread. Which wins depends entirely on the trade, and the comparison is usually done wrong.

A scalper chasing three pips cares about every fraction. A commission of seven dollars per round-turn lot sounds small until it's translated into pips: roughly 0.7 pips on most USD-quoted pairs. Add the raw spread of 0.1 to 0.3 and the all-in cost sits near one pip.

A standard account with a 1.2 pip spread and no commission lands in a similar place on paper, but the spread widens more aggressively in fast markets, while commission stays fixed. That's the part people forget.

The honest comparison uses a full week of trades on each account type, same pair, same hours, and totals the real cost per lot. Not the marketing minimum.

Another overlooked point: commission is charged on both sides of the trade, or as a round turn, depending on the broker. Reading the fine print on that one detail has changed the math for a lot of people.

Commission schedules also change with monthly volume. A broker may drop the per-lot charge after a certain turnover, which favors high-frequency scalpers. Some tiers apply retroactively, others only to future trades. Reading how the tiers are calculated, and over what period, can turn a mediocre cost structure into a good one, or reveal that the advertised discount applies only to volumes far beyond a typical account.

Which account type has come out cheaper in a real side-by-side test?