How to Choose Between Spread-Only and Commission Accounts (Which Is Actually Cheaper?)

To choose between a spread-only and a commission account, calculate your total trading cost based on trade size and frequency. Spread-only accounts bundle costs into the bid-ask spread, while commission accounts offer tighter raw spreads but charge a fixed fee per trade. The cheaper option depends entirely on how you trade, not on which model sounds lower.

Many traders assume a ‘raw spread’ account is automatically cheaper because it advertises spreads from 0.0 pips. Others assume a spread-only account is simpler and therefore better. The mistake is comparing headline spreads without including commission. A 0.1 pip raw spread plus a £7 commission per lot can cost more than a 1.2 pip spread-only account depending on position size. Traders also overlook how account type interacts with strategy. Scalpers, swing traders, and low-frequency traders experience cost differently. Without calculating realistic cost per month, traders may select an account structure that increases friction and reduces capital efficiency.

Brokers offer different pricing models under different account names. Some provide a standard spread-only account and a ‘raw’ or ‘ECN-style’ commission account. Others apply tiered commission based on volume. Spread-only accounts typically have wider spreads but no separate commission. Commission accounts usually offer tighter spreads sourced from liquidity providers, with a fixed commission charged per lot or per side. Some brokers widen spreads during volatile periods more aggressively on standard accounts than on raw accounts. The availability of account types also varies by jurisdiction and regulatory entity. Understanding how each broker structures its accounts prevents misinterpretation of pricing comparisons.

Spread-only accounts embed cost in the spread. For example, if EUR/USD has a 1.2 pip spread, that is the full visible trading cost per round turn. Commission accounts might show a 0.2 pip spread plus £7 commission per standard lot. To compare accurately, convert commission into pip equivalent. If £7 equals roughly 0.7 pips per lot, total effective cost becomes 0.9 pips (0.2 + 0.7). That may be cheaper than 1.2 pips — or not — depending on lot size and frequency. Small trade sizes may make commission accounts less efficient because fixed fees represent a larger percentage of trade value. Additionally, overnight financing costs remain separate from both models and must be considered for multi-day positions. Some brokers also charge minimum commission per trade, which affects smaller accounts disproportionately.

The choice between spread-only and commission accounts does not override the importance of regulation. Both account types can exist under regulated and offshore entities. Traders should verify that the broker offering either model is authorised by a recognised regulator and that client funds are segregated. Transparent disclosure of average spreads and commission rates is more common among regulated brokers. Marketing language such as ‘ECN’ does not guarantee direct market access; reviewing regulatory status and execution policy is essential before selecting account type.

Commission accounts are often marketed toward active traders who prioritise tighter spreads and faster execution. Some brokers link raw accounts to specific platforms such as MetaTrader 4, MetaTrader 5, or proprietary systems. Execution quality matters more than headline spread. During volatile markets, spread widening and slippage can offset theoretical cost advantages. Traders using automated systems may prefer commission accounts if spreads are consistently tighter, but should confirm that the platform supports their strategy without restrictions. Testing both account types via demo or small live deposits can provide practical insight into execution differences.

Lower spreads do not reduce market risk. Leverage, volatility, and position size remain the primary drivers of capital risk. Commission accounts may encourage higher trading frequency due to tighter spreads, which can increase exposure and transaction costs if not managed carefully. Spread-only accounts may appear simpler but can become expensive for high-frequency traders. Choosing an account structure without understanding trading behaviour can accelerate capital erosion. Regardless of account type, leveraged trading can lead to rapid losses. Risk management discipline remains more important than marginal cost differences.

Very small account holders may struggle with commission accounts that apply minimum fixed fees per trade. Low-frequency traders holding positions for days or weeks may not benefit meaningfully from marginally tighter spreads. Traders who do not track their trade size and frequency may find it difficult to compare models accurately. Anyone selecting an account purely because it advertises ‘0.0 pips’ without calculating effective cost should reconsider.

Step one: determine your average trade size in lots. Step two: estimate monthly trade frequency. Step three: calculate effective cost per trade under both models by converting commission into pip equivalent. Step four: include overnight financing if you hold positions beyond one day. Step five: check whether commission accounts have minimum per-trade fees. Step six: verify regulatory status and execution policy. Step seven: compare at least three brokers offering both account types side by side. Choose the structure that produces lower realistic monthly cost while maintaining regulatory safety.

Now compare brokers offering spread-only and commission accounts using our side-by-side fee comparison tables. Filter by pricing model, minimum deposit, and regulation to see which structure aligns with your trading frequency. You can also explore our Best Low-Spread Brokers and Best Commission Accounts pages for further comparison.