How Spread-Only Accounts Work
Spread-only accounts charge no separate commission per trade. Instead, the broker earns revenue by widening the spread --- the difference between the bid and ask price. This model is straightforward and makes it easy for traders to calculate costs before entering a position. However, spreads can widen significantly during periods of low liquidity or high volatility, which makes execution costs unpredictable for scalpers and news traders.
How Commission-Based Accounts Work
Commission accounts, often labelled as ECN or raw-spread accounts, offer much tighter spreads (sometimes as low as 0.0 pips) but charge a fixed commission per lot traded. This structure tends to be more transparent because the cost per trade is known in advance. For active traders who execute dozens of trades per day, the total cost of trading on a commission account is usually lower than on a spread-only account, especially on major currency pairs.
Choosing the Right Account for You
The best account type depends on your trading style and frequency. Casual swing traders who hold positions for days or weeks may find spread-only accounts simpler and more convenient. Day traders and scalpers who open and close multiple positions within hours will typically benefit from the lower all-in costs of a commission account. Before committing, use a demo account to compare the total cost of several trades under both models.
