One number, two ways of charging it
A spread is the gap between the buy price and the sell price. You pay it the moment you open, because you open at one and close at the other.
A commission is the same cost charged separately so the spread can be advertised as zero. Neither is a trick; what is a trick is comparing one against the other without converting.
On a standard lot of EUR/USD — 100,000 units — one pip is $10. So a commission per standard lot round turn, divided by ten, is what that commission is worth in pips.
| Account A — 1.0 pip spread, no commission | 1.0 pip = $10.00 |
|---|---|
| Account B — 0.1 pip spread + $7 round turn | 0.1 pip + 0.7 pip = 0.8 pip = $8.00 |
| Difference per lot | $2.00 in B’s favour |
| Over 100 lots a month | $200 |
| Over a year at that rate | $2,400 |
This is the calculation behind the all-in figure on every broker page here: published spread plus commission ÷ 10, in pips, so the ten brokers can be put in one column.
What the published number is not
Every broker publishes a typical spread, and typical is doing a lot of work in that sentence. The number is an average over conditions the broker chooses not to describe.
- It widens on news. A payrolls release can take EUR/USD from 0.1 to several pips for a few seconds.
- It widens at the session close, when liquidity providers step back.
- It is quoted on EUR/USD, the tightest pair there is. Everything else is worse, often by a lot.
- It says nothing about slippage, which is a separate cost and larger than the spread on a bad fill.
Comparing two brokers without fooling yourself
Once both accounts are in pips, the comparison is one subtraction — and it is still the easy half. The costs that decide the year are the ones that are not quoted at all.
- Convert both to all-in pips on the same pair. Anything else is comparing two units.
- Multiply by how much you actually trade. Half a pip is $5 a lot; at two lots a week it is $520 a year, which is real and is not life-changing.
- Check the withdrawal record. A fee saved and not paid out is not a saving — the withdrawal and outage log is the version of this nobody advertises.
- Check which entity you would be a client of, because the cheap account and the protected account are frequently not the same account.
Where cost actually stops mattering
Cost is 20% of the broker score on this site rather than the whole of it, and that is a deliberate ratio. A broker half a pip cheaper is worth nothing if your withdrawal takes three weeks or the entity you signed with has no compensation scheme behind it.
The order that survives contact with reality is: can I get my money out, is anyone supervising them, then what does it cost. See how the score is built, or go straight to the cheapest all-in — and read the licence column while you are there. If the entity question is new to you, which company you sign with is the one to read first.