A raw spread account is a type of forex trading account that provides traders with access to the tightest possible spreads available in the interbank market, without any markup added by the broker. Instead of earning revenue through spread markups, brokers charge a separate commission on each trade.
How Raw Spread Accounts Work
In a raw spread account, the broker passes through the actual bid-ask spreads from their liquidity providers with minimal or no markup. This means traders see spreads that can be as low as 0.0 pips on major currency pairs during peak liquidity periods. The broker’s compensation comes from a fixed commission charged per lot traded, typically ranging from $3 to $7 per side per standard lot.
Advantages of Raw Spread Accounts
Raw spread accounts offer several benefits for active traders:
- Cost transparency: The separation of spreads and commissions makes trading costs more visible and predictable
- Lower total costs: For high-volume traders, the combination of tight spreads plus commission often results in lower overall trading costs compared to standard accounts with marked-up spreads
- Better execution: Access to institutional-grade spreads can improve trade execution quality
- Scalping-friendly: The tight spreads make raw spread accounts particularly attractive for scalpers and high-frequency traders
Raw Spread vs. Standard Accounts
The key difference between raw spread and standard accounts lies in the pricing structure. Standard accounts incorporate the broker’s profit into wider spreads, while raw spread accounts charge narrower spreads plus explicit commissions. For example, a standard account might offer EUR/USD with a 1.5 pip spread and no commission, while a raw spread account might offer 0.1 pip spread plus a $7 commission per round-turn lot.
Who Should Use Raw Spread Accounts
Raw spread accounts are most suitable for:
- High-volume traders who execute many trades per day
- Scalpers who need the tightest possible spreads
- Algorithmic and automated trading systems
- Professional traders seeking institutional-grade pricing
- Traders who prefer transparent, itemized costs
However, for low-frequency traders or those trading small position sizes, the commission structure may not provide significant advantages over standard accounts.
Considerations
When choosing a raw spread account, traders should calculate their total trading costs by considering both the average spread and the commission structure. It’s important to compare the all-in cost across different account types and brokers. Additionally, raw spread accounts typically require higher minimum deposits than standard accounts, often starting at $500 to $1,000 or more.
For broker context, compare ASIC-licensed providers in our best CFD brokers Australia guide.