The ways of paying, side by side
Spread only
- What it is
- The gap between the buying and the selling price, with the provider’s charge inside it
- When it is paid
- On every trade
- How it is shown
- In the quote, with no separate line
- Depends on the size of the trade?
- Yes
- Depends on how long it is held?
- No
- Can it be a credit?
- No
- What makes it change
- The market: the spread widens when trading is thin or fast
Raw spread plus commission
- What it is
- A narrower gap between the two prices, and a separate fee for each trade
- When it is paid
- On every trade
- How it is shown
- Partly in the quote, partly as a line on the statement
- Depends on the size of the trade?
- Yes
- Depends on how long it is held?
- No
- Can it be a credit?
- No
- What makes it change
- The market moves the spread; the commission is usually a set amount for each lot
Swap
- What it is
- Interest charged or paid on a position kept open overnight
- When it is paid
- Each night a position stays open
- How it is shown
- A line on the statement each night
- Depends on the size of the trade?
- Yes
- Depends on how long it is held?
- Yes
- Can it be a credit?
- Yes, sometimes
- What makes it change
- Interest rates, and the provider’s own margin on them
How to read this table
Compare the first two columns with each other: they are two ways of charging for the same thing, and only the total of spread and commission can be compared between them. The third column is in addition to either. The row on holding time is the one that divides them: the first two are paid once for each trade however long it lasts, and the third grows with every night.
Each one, in a paragraph
Spread only
Every quote has two prices: a higher one to buy at and a lower one to sell at. The gap is the spread. On a spread-only account the provider’s charge is added to that gap and there is no other fee for the trade. A position starts at a small loss equal to the spread, because it was bought at one price and could be sold only at the other. Nothing appears as a line on the statement, which makes this the simplest pricing to read and the easiest to overlook.
Raw spread plus commission
Here the spread is passed on at, or close to, the level the provider itself is quoted, and the charge is made separately as a commission, usually a set amount for each lot traded and often taken once on opening and once on closing. The two parts must be added together to compare with a spread-only price. The commission does not widen when the market does, so the cost is steadier, and it appears as its own line.
Swap
A leveraged position is, in effect, a loan, and a loan carries interest. For a currency pair the swap comes from the difference between the two currencies’ interest rates, adjusted by the provider: holding the higher-rate currency may earn a small credit, and holding the lower-rate one costs. For other instruments it is a financing charge. It is applied once a day at the rollover time, and on one day of the week it is commonly applied three times over, to account for the weekend. A trade closed the same day pays none. Some accounts replace swap with a different charge.
Show me two side by side
Choose any two. The rows on which they give different answers are marked; the rest are the same for both.
Spread only and Raw spread plus commission differ on 3 of 7 rows and give the same answer on 4.
- What it isDiffers
Spread onlyThe gap between the buying and the selling price, with the provider’s charge inside it
Raw spread plus commissionA narrower gap between the two prices, and a separate fee for each trade
- When it is paidThe same
Spread onlyOn every trade
Raw spread plus commissionOn every trade
- How it is shownDiffers
Spread onlyIn the quote, with no separate line
Raw spread plus commissionPartly in the quote, partly as a line on the statement
- Depends on the size of the trade?The same
Spread onlyYes
Raw spread plus commissionYes
- Depends on how long it is held?The same
Spread onlyNo
Raw spread plus commissionNo
- Can it be a credit?The same
Spread onlyNo
Raw spread plus commissionNo
- What makes it changeDiffers
Spread onlyThe market: the spread widens when trading is thin or fast
Raw spread plus commissionThe market moves the spread; the commission is usually a set amount for each lot
One invented trade, held for three nights
A drawing of the mechanism. Choose one of the ways of paying beneath it and the sentence says what the drawing shows.
Spread only: the two prices stand well apart, and the whole cost is met at once, as the trade crosses from one to the other.
An invented trade. The heights are chosen to show when each cost arrives, not how large it is: no rate or amount here is real.
Questions people ask
- Which is cheaper: spread only, or raw spread plus commission?
- It depends on the numbers, and they have to be added up. The cost of a raw-spread trade is the spread plus the commission for opening and closing; the cost of a spread-only trade is the spread alone. Whichever total is smaller for the size and instrument traded is cheaper for that trade. Neither is cheaper as a rule.
- What is swap in trading?
- Swap, also called rollover or overnight financing, is interest charged or paid on a position left open past the end of the trading day. For currencies it reflects the difference between the two interest rates, adjusted by the provider. It is applied every night the position stays open, so it grows with the length of the hold.
- Is the spread a fee?
- It is a cost, though it is not shown as a fee. A position is opened at one of the two prices and can be closed only at the other, so it begins at a loss equal to the spread. On a spread-only account the provider’s charge is part of that gap.
The words on this page
A general explanation for study. It is not advice or a recommendation, it does not say which of these to use, and it does not describe the terms of any account. What GIO4X itself offers is set out on Account types, not here.