Every retail trade carries a cost — but that cost isn't always labelled clearly. Here's how to read what you're really paying, and why it matters.
Why does the same EURUSD trade cost different things on different platforms — or even on different account types at the same broker? The answer almost always comes down to one question: are you paying through the spread, through a commission, or through some combination of both?
This is one of the most practical things a retail trader can understand. It affects every single position you open, and it compounds across hundreds of trades.
The Spread Is a Cost, Not Just a Number
When you look at a quote for EURUSD, you see two prices: the bid (the price you can sell at) and the ask (the price you can buy at). The difference between them is the spread.
If the bid is 1.08500 and the ask is 1.08512, the spread is 1.2 pips. The moment you open a long position at 1.08512, the market would need to move 1.2 pips in your favour just for you to break even — because if you closed immediately, you'd sell back at the bid of 1.08500.
That gap is the cost of the trade. On a spread-only account, this is the entire transaction cost. No separate line item appears. The cost is embedded in the price you receive.
Why does this matter? Because spreads are not fixed. They widen during low-liquidity periods — early Asian session, major news releases, market open on Mondays — and tighten during high-volume hours. A spread that reads 1.2 pips at 10:00 GMT+3 on a Tuesday might be 3.5 pips at 00:30 GMT+3 on a Sunday. If you trade around events like Wednesday's FOMC Statement (14:00 GMT+3) or the BOJ Policy Rate decision (Tuesday, 28 April 2026, 22:30 GMT+3), expect spreads to spike sharply in the seconds surrounding the release.
Commission Accounts Work Differently
On a raw spread or ECN-style account, the spread you see is much tighter — often 0.0 to 0.3 pips on EURUSD during liquid hours. But a separate commission is charged per lot, per side or per round turn.
A common structure (for illustration) might be $3.50 per side, meaning $7.00 per round-turn lot. On a standard lot of 100,000 units of EURUSD, that $7.00 is equivalent to roughly 0.7 pips. So the effective spread — raw spread plus commission — might be 0.2 + 0.7 = 0.9 pips total.
Compare that to a spread-only account quoting 0.9 pips on the same pair at the same moment — the total trading cost is the same, meaning there’s no real pricing advantage between the two account types in that scenario, just a different way of structuring the fees.
This is why the commission/spread distinction isn't a question of which is better in the abstract. It depends on the numbers in front of you.
A Worked Example: Two Accounts, Same Trade
The following numbers are for illustration only and do not represent live market prices or guaranteed costs.
Suppose you buy 1 standard lot of EURUSD (100,000 units).
Account A — Spread-only:
- Spread at time of trade: 1.6 pips
- Commission: $0
- Total cost: 1.6 pips = $16.00
Account B — Raw spread + commission:
- Spread at time of trade: 0.4 pips
- Commission: $6 per side × 2 = $12.00
- Spread cost: 0.4 pips = $4.00
- Total cost: $16.00
What This Means for Different Trading Styles
- Scalpers and high-frequency traders open and close positions rapidly. Every pip of spread is paid repeatedly. A raw-spread account with commission almost always wins here, provided the commission rate is competitive.
- Swing traders hold positions for hours or days. The entry/exit cost is a smaller proportion of the total move they're targeting. Either account type can be cost-effective; the spread-only account may be simpler to track.
- News traders face a specific risk: spreads on both account types widen during releases. The commission component on Account B remains fixed, but the raw spread can spike. Knowing your broker's typical spread behaviour around high-importance events — like Tuesday's BOJ rate decision or Wednesday's FOMC — is part of managing that risk.
How to Compare Costs Accurately
The only fair comparison between account types is effective spread — the all-in cost expressed in pips or currency per lot.
To calculate it:
- Note the spread at the moment of execution.
- Convert any commission to pips: divide the round-turn commission in dollars by the pip value of the instrument.
- Add the two together.
For a standard EURUSD lot, each pip is worth $10. A $7.00 round-turn commission equals 0.7 pips. Add that to whatever raw spread you received.
Do this across several trades at different times of day. Patterns will emerge. You'll see when your account type is cost-efficient and when it isn't.
One actionable step: before your next trade, write down the spread you see at entry and any commission you'll pay. Calculate the effective spread. Do it ten times. You'll quickly develop an intuition for when the market is offering you a fair entry cost — and when it isn't.
For information only. This is market commentary and education, not investment advice. Figures are as at the time of writing.