Raw Spread Plus Commission or Wide Spread With None?

[Shadow Trader]

Two account types dominate retail forex: one with a wider marked-up spread and no commission, the other with a tight raw spread plus a per-lot commission. Comparing them by headline spread alone is misleading, because the true cost is the sum of both.

The cleaner method is to convert everything into pips per round turn. A commission charged per lot can be translated into a pip equivalent by dividing the currency amount by the pip value of one lot. That figure is then added to the average spread observed during the hours actually traded, not the minimum advertised.

Averages hide variation. A raw account may show a spread near zero during the best moments and several tenths of a pip at other times, while a standard account may hold a more stable markup. A strategy that trades often in quiet periods may be affected differently from one concentrated near the London open.

Another detail is whether commission is charged on opening only, or on both opening and closing. Terms differ between brokers and are easy to misread. Reviewing a month of statements and calculating the realised all-in cost per lot is a more reliable comparison than any marketing table.