Spreads, commissions and swaps: the real cost of forex

"Zero commission" sounds cheap, but it tells you little. A broker earns from your trades in several ways. To compare total costs, you add everything up.

1. The spread

The spread is the difference between the buy price (ask) and the sell price (bid). You pay it on every trade. A spread of 1.0 pip on one standard lot of EUR/USD costs about €9.22.

2. Commission

On a raw or ECN account the spread is very tight, but you pay a fixed commission per lot. On a standard account the broker's fee is built entirely into the spread.

Worked example: which is cheaper?

	Raw account	Standard account
EUR/USD spread	0.2 pip (≈ €1.84)	1.0 pip (≈ €9.22)
Commission per lot	€6.00	€0.00
Total per lot	≈ €7.84	≈ €9.22

Assuming a rate of 1.0850. The more often you trade, the bigger the difference.

3. Overnight financing (swap)

If you hold a position overnight, you pay or receive financing costs. They depend on the interest rate difference between the two currencies plus a broker mark-up. On Wednesdays the charge is often tripled because of the weekend.

4. Other costs

• Inactivity fees if you don't trade for a long time
• Withdrawal fees per withdrawal
• Currency conversion if your account is in a different currency from the instrument

Our comparison table lists every broker's costs side by side. Calculate your own costs with the spread cost calculator.