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 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:
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.
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.
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|💲 Min Deposit||$200||$200|
|⚖ Max Leverage||1:500||1:30|
|💡 Min Position||0.01 lot||0.01 lot|
|💳 Payment||Crypto, BPAY, Credit/debit cards, FasaPay, Neteller, PayPal, Skrill, UnionPay and Wire transfer||Credit/debit cards, PayPal, UnionPay and Wire transfer|
|🧩 Forex Demo Account|
|📁 Segregated Account|
|🕋 Islamic Account|
|👨💻 PAMM Account|
|📈 Managed Account|
|🇺🇸 US traders are welcome|
|🏆 Trading contests|
|⚡ Automated trading|
|💹 Interest rate on funds|
|💰 Bonus offers|
|📖 Free education|
|📱 Mobile trading|
|💻 Browser-based platform|
|1️⃣ One-click trading|
|⏱ Trailing stop|
|⏳ Pending orders|
|Gold & Silver|
|🗣 Website Languages||Arabic, Chinese, English, German, Indonesian, Japanese, Korean, Malay, Portuguese, Russian, Spanish||Chinese, English, Russian|
|🚪 Open Account||Open IC Markets||Open Pepperstone|