Commission

In practice

A raw-spread account might charge $7 per round turn per lot but show a 0.0–0.2 pip spread on EUR/USD. A 'standard' account charges no commission but adds ~1 pip to the spread. For a scalper taking dozens of trades, the raw account is usually cheaper; for a position trader, the spread difference barely matters.

Why it matters for traders

Commission versus spread is a trade-off tied to your trading style, and getting it wrong means bleeding money to the broker every trade. The only way to choose is to know your own average trade size and frequency — costs compound, and the cheaper-looking account is not always cheaper in practice.

Common pitfall

The pitfall is choosing an account type by gut rather than math. A 'zero commission' standard account is cheaper only if you trade infrequently with wide targets; for a scalper, the padded spread on each tiny trade costs more than a flat commission ever would. Estimate your typical number of trades and lot sizes, then compare the two account structures in actual dollars — the 'free' option is often the more expensive one.

Putting it in context

Cost and leverage terms like this one matter more to your long-term results than most entries or indicators ever will. Two traders taking identical trades can end the year with very different accounts purely because of spread, swap, commission, and position size. The habit to build is computing the full cost of a trade before entering it — not just the stop-loss distance, but every charge the broker applies between open and close. On a demo account these costs feel invisible; on a live account, over hundreds of trades, they decide whether an otherwise sound strategy is profitable. Revisit your broker's actual charges every few months, because advertised headline figures rarely reflect what an average retail trade really pays.

Lessons that use this term

• Spread, commission and swap

  The three ways a trade costs you money before it even moves.

Related terms