Account types: standard, raw spread, cent
What you learn in 3 minutesThe account type changes what a trade costs in naira. This lesson compares a standard account with a raw spread account on the same EUR/USD trade, so the total cost can be worked out before you open anything.
One EUR/USD round trip on 0.10 lots: ₦3,255 against ₦2,605
| Step | Amount | Note |
|---|---|---|
| Trade size | 0.10 standard lots | 0.10 of a standard lot, so one tenth of the full contract |
| One pip on one standard lot | 10 units of the quote currency | 100,000 x 0.0001; the quote currency is the second currency in EUR/USD |
| One pip on 0.10 lots | 1 unit of the quote currency | 10 x 0.10 |
| Standard account spread | 1.5 pips | a typical quoted spread; it varies between brokers and by the minute |
| Standard account spread cost | 1.5 units of the quote currency | 1.5 x 1 unit |
| Raw spread account spread | 0.2 pips | a typical quoted spread on this account type; it also varies |
| Raw spread account spread cost | 0.2 units of the quote currency | 0.2 x 1 unit |
| Raw spread account commission, in and out | 1.0 unit of the quote currency | a typical round-trip commission per 0.10 lots; the broker sets this and it varies |
| Rate used to convert to naira | ₦1,500 per unit of the quote currency | an example rate only; the real rate moves and the broker's rate may differ |
| Standard account total cost | ₦3,255 | 1.5 units x ₦1,500 = ₦2,250 spread, plus ₦0 commission |
| Raw spread account total cost | ₦2,605 | 0.2 units x ₦1,500 = ₦300 spread, plus 1.0 unit x ₦1,500 = ₦1,500 commission |
The broker may round the spread, quote a different spread at news times, charge the commission when the position opens, when it closes, or split it, and add swap or overnight charges on positions held past the daily cut-off. All of these change the total.
The mistake people make here
The common mistake is to pick the account with the lowest advertised spread and stop there. The spread is only one part of the cost, and on a raw spread account the commission can be larger than the spread saving. Add the spread cost and the commission together, in naira, for the size you actually plan to trade. Then compare that total with the same total on the other account type. If the two totals are close, the choice matters less than the size of the trade.Check yourself
On 0.10 lots of EUR/USD, a standard account quotes 1.5 pips and a raw spread account quotes 0.2 pips plus a round-trip commission of 1.0 unit of the quote currency. At ₦1,500 per unit, what is the total cost on each account?
One pip on 0.10 lots is 1 unit. Standard: 1.5 x ₦1,500 = ₦2,250. Raw: 0.2 x ₦1,500 = ₦300 spread, plus 1.0 x ₦1,500 = ₦1,500 commission, giving ₦1,800. The raw spread account is ₦450 cheaper on this trade.
If the commission on the raw spread account were 2.0 units instead of 1.0 unit, which account would be cheaper?
Raw spread cost would be ₦300 spread plus 2.0 x ₦1,500 = ₦3,000 commission, giving ₦3,300. The standard account at ₦2,250 would then be cheaper by ₦1,050.