spread account vs commission account - which is actually cheaper for a beginner

[richardlee]

looking at two account types at the same broker. one has 1.2 pip spread and no commission. the other has 0.1 pip spread and $7 commission per lot round trip. i've been trying to calculate which is cheaper but can't figure out how to compare them properly.

i trade maybe 5-10 trades a week, each around 0.1-0.3 lots. which account type actually makes sense at my size?

[Ryan]

convert everything to dollars per lot. 1 pip on eurusd = $10 per standard lot. so 1.2 pip spread = $12 cost per lot round trip. the commission account: 0.1 pip = $1 plus $7 commission = $8 total. the commission account is cheaper per lot. at 0.1 lots: spread account = $1.20, commission account = $0.80. the more you trade the more the commission account wins.

[cameronv]

correct calculation above. the general rule: if you're trading eurusd or other majors, commission/raw accounts are almost always cheaper once you do the math. spread-only accounts are designed to look simpler, and they are, but you pay for that simplicity in higher total cost.

[Cole]

does the commission account have any disadvantages besides the upfront fee? like do they treat you differently?

[coldvision]

no, commission accounts are premium accounts at most brokers. you're the better customer. they may have slightly higher minimum deposits. the only practical difference is the math looks more complex at first because you see the fee separately. psychologically some beginners find it jarring, but it's strictly better economics for active traders.

[urbanlegend]

started on a spread account, switched to commission after 3 months. the monthly saving was small at my size but the execution felt different too - less filtering or widening during news. whether that's placebo or real i can't prove but i stayed on commission after that.

[Nicholas]

commission account cheaper. do the math: (spread in pips × 10) vs (raw spread × 10 + commission). almost always commission wins on majors.