PRACTICAL GUIDE
Explained concepts, worked cases and practice to test your understanding. Numerical examples are hypothetical; replace assumptions with your instrument specifications.
Two different costs
The spread is the difference between buy and sell prices. Commission is a charge that may apply per transaction or trading volume. An account can combine both, so looking at the spread alone cannot establish total cost.
Understand the mechanism, not just the definition
Pricing can be split between the bid/ask gap and explicit commission. “Spread from zero” does not complete the comparison. For an estimate, normalize components to the same currency and volume. Executed opening/closing prices already incorporate the relevant spread; do not subtract it twice.
Compare the same scenario
Use the same instrument, volume, account type, and reference currency. Check whether commission is quoted per side or for opening and closing a trade. Variable spreads change with liquidity, time, and market conditions.
Worked case, step by step
Compare hypothetical accounts at one EUR/USD lot with USD 10 per pip. A has 1.2-pip spread and no extra commission: USD 12 estimated. B has 0.2 pip plus USD 7 round-trip: USD 9. At 0.10 lot without minimums, these become USD 1.20 and USD 0.90. This does not identify today’s cheaper broker; observed spread, funding, conversion and actual terms remain necessary.
B: 0.2 × 10 + 7 = 9 USDWhat to verify when applying this
Review overnight financing, currency conversion, and deposit or withdrawal charges. Check the terms of your contracting entity. A price advertised as “from” does not guarantee the cost of every trade.
Practice: verify it in your environment
Learn by observing the process and keeping its data. Complete this practice in demo or using documentation, without sending real orders or adding capital for the exercise. Record differences between the example and your account specifications.
- Record spread, pip value, volume and per-side or round-trip commission.
- Repeat at another volume and check minimums or non-proportional charges.
Test your understanding
Try the question before revealing the answer. Justify the conclusion and its assumptions rather than memorizing a number.
Is a no-commission account necessarily cheaper?
Reveal the explained answer
No. Sum components under the same scenario. A has higher estimated cost in this example despite no explicit commission.
Sources for further learning
Consult original documentation to check units, features and terms. Your account specifications take precedence over examples in this guide.
