Short answer: neither model is cheaper by nature. Convert both to the same unit — cost per standard lot traded — and compare. On pairs quoted in US dollars one pip on a standard lot is worth $10, so a raw account charging $7 per lot round-turn in commission beats a spread-only account whenever the spread-only account's spread is more than about 0.7 pips wider than the raw one. Below that gap, spread-only is cheaper.
The Two Cost Models in Forex
Every forex broker charges you in one of two ways — or a combination of both:
1. Spread-only pricing (no commission): the broker's charge is built into the gap between the buy (ask) and sell (bid) price. There is no separate fee line on your statement, but you pay the spread every time you open a position. Brokers usually call this a Standard account — Eightcap's Standard account, for example, lists spreads "from 1.0 pips" with no commission (read on its account page, 30 September 2026).
2. Raw spread plus commission: the spread is close to the underlying market price and the broker charges a separate commission per lot. Pepperstone's Razor account, read on 30 September 2026, lists spreads from 0.0 pips and commission on margin FX and gold "from $3.50/lot/side" — $7 per standard lot for a round trip (open and close).
A spread is therefore a fee too — just one that is paid in price rather than itemised. "From" figures are minimums; the spread you actually pay moves with liquidity and the trading session.
One Formula for Both
Cost per round-turn lot = (spread in pips × pip value) + round-turn commission.
For a standard lot (100,000 units) of a USD-quoted pair such as EUR/USD, the pip value is $10 (100,000 × 0.0001). The same formula works for any size: a 0.10 lot has a $1 pip value and pays one-tenth of the per-lot commission.
Worked Example: 100 Round-Turn Lots of EUR/USD
The spreads below are illustrative assumptions for the arithmetic, not quotes from any broker.
Spread-only account at an assumed average 1.0 pip:
- 1.0 pip × $10 × 100 lots = $1,000
Raw account at an assumed average 0.1 pip plus $7 commission:
- Spread: 0.1 pip × $10 × 100 = $100
- Commission: $7 × 100 = $700
- Total: $800
Here the raw account is $200 cheaper. Change the assumption to a spread-only average of 0.8 pips — exactly 0.7 pips wider than the raw 0.1 — and the two cost the same ($800 each); below that, spread-only wins.
When Spread-Only Is the Better Choice
Because both costs scale with position size, trading smaller lots does not by itself change which model is cheaper — a 0.01 lot pays one-hundredth of the commission as well as one-hundredth of the spread cost. The model flips on the size of the spread gap, not on your lot size.
Spread-only can still be the sensible pick when:
- the broker's standard spread on the pairs you actually trade is close to its raw spread plus commission
- you want one all-in number per trade rather than two
- the broker applies a minimum commission per ticket, which does make tiny trades proportionally dearer — check the account's fee schedule for one
For the account-by-account version of this comparison, see raw vs standard: when is it cheaper?, and to read a live quote correctly, how to read forex spreads.
The spread exists because someone is quoting it. How the interbank market is structured covers who those counterparties are and why their pricing differs, and ECN vs market maker brokers covers how each execution model earns its money.
Hidden Costs Beyond Spread and Commission
Spread and commission are only the costs of trading. Check these too before choosing an account:
- Overnight swap rates for positions held past the daily rollover — see forex swap and rollover fees explained
- Inactivity fees charged by some brokers after a period with no trading — see inactivity fees explained
- Withdrawal minimums and fees — see minimum withdrawals explained
- Currency conversion when your account currency differs from the instrument — see account currency conversion costs
Frequently Asked Questions
What is spread-only pricing?
An account where the broker charges no separate commission and takes its fee through a wider bid-ask spread. It is usually sold as a Standard account.
What is commission in forex trading?
A fixed charge per lot, usually quoted per side (opening or closing) and paid on top of a raw spread. Pepperstone's Razor account, for example, lists "from $3.50/lot/side" on margin FX, which is $7 per lot for a full round trip.
Is a commission account better for beginners?
Not automatically. Run the formula above on the pairs you expect to trade. Beginners often trade small sizes, but because both costs scale with size, the deciding factor is still the spread gap, plus any minimum commission per ticket.
Next Step
Put two real fee schedules side by side for the pairs you trade — our lowest-spread accounts guide and the broker comparison are the quickest place to start.
This article is for informational purposes only and does not constitute financial advice. CFDs are leveraged products and most retail accounts lose money — your capital is at risk.
