Which is Better, Raw Spread or Standard Trading Account?

Main differences between raw spread trading account and standard trading account lie in trading costs, namely spread and commission fees.

Many forex brokers nowadays provide several types of trading account. Two of the most popular offerings are raw spread trading account and standard trading account. After practicing in the forex demo account, beginners may choose micro or mini account at their starting point, but then they will have to choose between raw spread vs standard account when they are going to upgrade their trading environment. So, here comes the crucial question: which is better, raw spread or standard trading account?

Actually, each forex broker may establish different terms and conditions for their trading accounts. Standard trading account in different brokers would most probably have different fees, maximum leverage, margin requirements, and so on. So does raw spread account. This makes it difficult to decide which type of account is better without knowing in which broker you are going to open the accounts. Still, we could compare general circumstances of raw spread vs standard account apart from those specific terms.

Raw Spread or Standard Trading Account

Raw Spread vs Standard Account Comparison

A raw spread trading account, also often called an ECN account, offers real market prices for all instruments. Forex brokers will not add any markup on asset prices, so spreads usually are extremely low or even zero. However, traders have to pay a higher commission fee for each trade executed. Some forex brokers charge the fees for each opening and closing trade ("per side"), while some others may charge fees after one full round-turn.

A standard trading account offers asset prices that have been added a certain amount of markup by the broker. Spreads are usually higher, while commission fee for each trade will be cheaper or even free.

For example, let's assume you want to buy the EUR/USD which is currently traded at 1.2100. If you have a raw spread account, you will probably be able to buy it at 1.2100. As soon as the price rises to any level, you can close the position with considerable profit (although you have to make sure the gain will offset the commission fee as well).

If you have a standard trading account, you probably could only buy it at an ask price of 1.2102. It means you are going to incur a loss of 2 pips as soon as you entered the trade. This is what everybody calls a spread. In order to close the trade in the green, EUR/USD has to rise at least 3 pips. Even so, your profit will always be 2 pips less than what it should be.

Spreads calculation is usually automated so you don't have to count it every single time you open a trade. But if you'd like to check the accuracy of your broker's spreads to its pricing, feel free to use the calculator below:

Forex Spread Calculator

So, Which One Do You Think is Better?

Every trader may have a different opinion in accordance with their own trading style. If you are a scalper and need to profit from minor changes in asset prices, the raw spread trading account might be more suitable. But if you are a swing trader or position trader, the standard trading account might be more advantageous. Actually, applying a longer-term strategy can give you more freedom in choosing trading accounts; you're not bound to pick the one with the most accurate pricing, unlike short-term strategies which highly depend on it.

You can compare both spread and commission fees that are charged by your chosen broker to make sure which one will incur lower costs for your trading strategies.

For example, IC Markets, a pioneer who popularized the term "raw spread" throughout the world. The Australian-licensed forex broker provides Raw Spread Trading Account with spreads starting from 0 pip and commission fees of $3.0 per standard lot. IC Markets also offers Standard Trading Account with zero commission and spread starting from 1.0 pip. Both could be opened with a starting deposit as low as USD200.

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IC Markets is an online forex broker operating under the company of International Capital Markets Pty Ltd. Traders under the Australian jurisdiction are provided with the trading service of IC Markets AU that is headquartered in Australia and licensed by the Australian Securities and Investments Commission (ASIC).

On the other hand, non-Australian traders who open an account in this broker are registered under IC Markets SEY that is based in Seychelles, and regulated under the Seychelles Financial Services Authority (SFSA). The dual operation is a result of the relatively new rules from ASIC that prohibit their regulated broker to offer trading services outside Australia.

Classified as an ECN broker, IC Markets provide clients with MetaTrader 4, MetaTrader 5, cTrader as platform trading options. This broker also follows market trends to include Cryptocurrencies as one of its products, enriching its already wide selection of trading assets that include Currencies, Indices, Metals, Energies, Softs, Stocks, as well as Bonds.

The minimum deposit in IC Markets is in the middle range compared to other ASIC-regulated brokers, as it reaches $200 for every client. Market analysis materials are also prepared regularly for trading insights on IC Markets's official website, proving their competence to serve their traders with important contents created by market experts that work specifically for them.

For payment methods, IC Markets allows funding and withdrawal via wire transfer, credit card, PayPal, Skrill, Neteller, FasaPay, UnionPay, as well as Bitcoin via BitPay. The more interesting aspect from this broker is its multi-base currencies that include USD, AUD, EUR, GBP, SGD, NZD, JPY, CHF, HKD, and CAD.

As the trading technology in IC Markets is highly equipped with co-located servers and extremely low latency (especially on cTrader), the broker is widely known for its capability in hosting traders with the special needs for high-frequency trading as well as scalping.

To sum up, IC Markets is a fitting destination for active traders looking for a well-regulated broker. IC Markets is also flexible in terms of base currency and payment methods, signaling their commitment to welcome traders beyond their home country. As of late 2019, IC Markets provided their website in 18 international languages including English, Korean, Indonesian, French, Spanish, Italian, Malay, German, and Chinese.

Its fellow Australian forex broker, Pepperstone, also offers both raw spread (under the name "Razor Account") and Standard Account for retail traders. Pepperstone's Razor Account provides institutional grade spreads without markup (average EUR/USD spread at 0.0 - 0.3 pips) and commission starting from $7 for each 100k traded per round turn. While Standard Account charges spread around 1.0 - 1.3 pips and zero commission fees.

12 Comments

David Elstob

Mar 29 2021

Spreads are next to nothing on the majors, so the big plus I can see is if you're a professional is for trading exotics, then the Razor account would make sense?

Obviously exotics - especially volatile ones - can have huge spreads on a standard account.

Aisha

Sep 7 2021

Yes, that is correct. I see most traders who prefer raw spread accounts are professionals.

Dakota Ross

Apr 11 2022

As long as you have enough money, any type of account should not be a problem. Am I right? LOL.

Bill

Jan 2 2023

Dakota Ross: No, it is not only about your fund. Spreads can have a significant impact on trading results as they can be calculated while a trading position is open. If you are a scalper then if you open and trade a lot of positions in the same timeframe and open a standard account and do scalping.Most of the standard accounts spreads can be at least 1 pip so profit is definitely below target. So, if you open 20 positions, you will be charged 20 pips ($20). But, for example, if you open an account with RAW spreads where spreads start at 0 points, you will be charged 0.1 x 20 positions, only 2 pips, which could be as low as $2. SO, what's most important is how your strategy will suit you and your trading condition.

Novi

Bill: For the note, the RAW account may sound cheaper than standard account but for the commision can higher than you expected and yet- it still will cheap since you need to trade up to 1 lot. But if you get higher floating rate due to the market, some pairs can floating spread that sometime at RAW account can float higher making the spread become more expensive and can change your profit target result that you want. So always to check the floating spread first before trading

Roger

Apr 12 2022

I'm still confused about the difference between PAMM account and Managed account. In general, though, the meaning is the same. Explanation on Pepperstone table why do you have PAMM checked but not on Managed account?

Hunter

Apr 13 2022

Roger: It seems the information from this website needs to be updated because on the Peppertone website it is explained that they accept PAMM or MAM accounts. You can check it via this link.

Anita

Roger: PAMM account is an account that make Investor can allocation their funds to fund manager to optimized what their invest. But at managed account you can do the same thing but your fund will be executed by other trader that have good performance in trading or even EA. So, basicly PAMM managed by fund manager meanwhile managed account by other trader. Because of that, this two things are completly different.

Patricia Anderson

Apr 18 2022

I am today years old to know that raw spread is actually an ECN account? Why do I always think that they are different?

John

Patricia Anderson: actually the ECN account can be called Raw ECN Account as well. I also dont know about the different of RAW Spread and ECN Account but for the sure, all of these terms all allowing you to get benefit of trading by 0 spread which is we can feel the trading environment almost without fees at opening position.

Angela Thomas

Nov 20 2022

In order to close the trade in the green, EUR/USD has to rise at least 3 pips. Even so, your profit will always be 2 pips less than what it should be. So, because of this system, I always open a position and always float the loss, even sometimes the opening price and the current price are at the same level. Not surprising! But at least they have found a legitimate way to profit from their users as long as they don't take away your money with a scam program, I think I should be fine with profiting from the pips or commision or anything as long it's transparent to me. And I can say Neither raw nor standard account, as long as you get more profit than the pips they cut, you will be profitable.

Michael

Angela Thomas: Yes! That's the point I have been thinking. If the charged even 2-3 pips it will not affecting to our trade too much because the price can rises and drops very quickly even with one move, they can rises and drops more than 3 pips. Neither is RAW spread or not, we need to patient and just careful to understand the spread's of the pair that we trade. You need to take profit more than pips!

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Which is Better, Raw Spread or Standard Trading Account?

Raw Spread vs Standard Account Comparison

So, Which One Do You Think is Better?

12 Comments

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