Account types: standard, raw spread, cent
What you learn in 3 minutesThis lesson compares what the same round trip on EUR/USD costs on a standard account and on a raw spread account. The price on the chart looks identical on both, but the money leaving the account is not. One pip on one standard lot is 10 units of the quote currency, so at an exchange rate of about ₱56 to the dollar that pip is worth roughly ₱560, and the spread is charged in pips while commission is charged in cash.
One round trip on EUR/USD: 1.6 pips against 0.2 pips plus ₱1,120
| Step | Amount | Note |
|---|---|---|
| Instrument and price | EUR/USD near 1.0850 | the price shown on the chart is the same on both account types |
| Trade size | 1 standard lot | 100,000 units of the base currency |
| Value of one pip | 10 units of the quote currency | 100,000 x 0.0001; converted at the current rate, about ₱560 at ₱56 to the dollar |
| Standard account spread | 1.6 pips | the shaded band on the left screen; brokers quote different spreads and this figure varies |
| Standard account cost | 1.6 x ₱560 = ₱896 | spread only, no separate commission |
| Raw spread account spread | 0.2 pips | the narrower band on the right screen; this figure also varies between brokers |
| Raw spread account commission | ₱1,120 | charged per round trip per lot; brokers set different commission amounts |
| Raw spread account cost | (0.2 x ₱560) + ₱1,120 = ₱112 + ₱1,120 = ₱1,232 | spread plus commission |
| Difference on this trade | ₱1,232 - ₱896 = ₱336 | the raw spread account costs more here, because the commission is larger than the spread saved |
The broker may round the pip value, widen the spread at busy times, charge swap if the position is held overnight, and add conversion costs if the account is funded in pesos. Commission amounts and spread figures vary between brokers, so the numbers above are a worked example, not a quote.
The mistake people make here
The common mistake is to read the raw spread account as the cheaper one because the number on the chart is smaller. The spread is only one part of the cost. The commission is the other part, and on a small trade the commission can be larger than the spread saved. Before choosing, add both numbers for the size you actually trade, then compare the totals. If the plan is to trade smaller sizes, a cent account may suit better, because the same pip movement is worth less money and the cost per trade is smaller in peso terms.Check yourself
On one standard lot of EUR/USD, one pip is 10 units of the quote currency. At ₱56 to the dollar, what is one pip worth in pesos?
10 x ₱56 = ₱560.
A standard account quotes a spread of 1.6 pips on one standard lot. What is the cost of the round trip in pesos?
1.6 x ₱560 = ₱896.
A raw spread account quotes 0.2 pips plus ₱1,120 commission on the same trade. What is the total cost, and which account is cheaper?
(0.2 x ₱560) + ₱1,120 = ₱112 + ₱1,120 = ₱1,232. The standard account is cheaper on this trade by ₱1,232 - ₱896 = ₱336.