Key takeaways
- Compare the total of spread, commission, financing and other costs for the same trade.
- Average spreads are more honest than minimum spreads.
- A fee that looks small per trade can dominate if you trade often.
A broker that advertises 'zero commission' can still be expensive, and one with a visible commission can be cheap. Costs hide in different places depending on the product. To compare fairly you need to price the same trade at each broker, including everything that applies.
The four layers of cost
| Layer | What it is | When you pay it |
|---|---|---|
| Spread | Difference between buy and sell price | Every time you open and close |
| Commission | Explicit fee per lot, share or contract | On execution; sometimes on both sides |
| Financing / swap | Interest paid or earned for holding leveraged positions overnight | Each night the position stays open |
| Other | Currency conversion, inactivity, withdrawal, data and platform fees | Depends on account activity |
Worked example: one standard lot of EUR/USD
Imagine two accounts. Account A shows a 1.0 pip average spread and no commission. Account B shows 0.2 pips and a 7 USD round-turn commission. A standard lot is worth about 10 USD per pip, so Account A costs roughly 10 USD in spread. Account B costs about 2 USD in spread plus 7 USD in commission, around 9 USD. The accounts are close, and which one wins depends on the real average spread at the time you trade, not the lowest figure in the brochure.
Illustrative figures for one standard lot; always recalculate with current quotes.
How to compare two brokers fairly
- Pick one scenario. For example one lot of EUR/USD held for one week, or a 2,000 USD share purchase.
- Use average, not minimum, spreads. Minimums appear only during the most liquid minutes.Tip: Check spreads around news and at market open too.
- Add the commission schedule. Convert it to the same currency and unit as the spread.
- Add overnight financing. Look up long and short swap rates for the instrument and the days held.
- Add non-trading costs. Currency conversion on deposits, withdrawals and fills in a foreign currency.
Frequently asked questions
Is a wider spread always worse?
Not if commission is zero and the total is lower. Compare totals.
Why do swaps differ between brokers?
They reflect the broker's financing markup on top of interbank rates.
Do fees change over time?
Yes. Check dates on any fee table and re-check before large trades.