How Brokers Actually Make Money on Raw-Spread Accounts — Commission Math Explained

Most retail traders see "0.0 pip spread" on a raw-spread or ECN account and assume the broker has given up its primary revenue line. That is not what is happening. Brokers run raw-spread accounts because the unit economics work — they make their money on a different lever, and in some cases they make more per round-turn than they would on a marked-up standard account. This piece breaks down the math.

The two revenue models, side by side

A retail forex broker covering an EU client typically offers two account archetypes:

1. **Standard account**: spreads marked up by 0.5-1.5 pips over the raw interbank quote. No explicit commission. 2. **Raw-spread / ECN / Pro account**: raw interbank spreads passed through (often 0.0-0.2 pips on EUR/USD). Explicit commission charged per side per lot.

The casual read is that the standard account is the broker's profit centre and the raw-spread account is a courtesy for advanced traders. The math says the opposite is often true.

On a Standard EUR/USD trade at a 1.0-pip mark-up, one full lot (100,000 notional) generates USD 10 per round-turn (0.0001 EUR/USD × 100,000 × 2 sides, converted at parity). On a Raw Spread tier with commission of USD 3.50 per side per lot, the broker collects USD 7 per round-turn directly — plus whatever residual mark-up sits in the execution layer (more on that below).

So on paper the standard account looks like the bigger earner. The reason raw-spread accounts often outperform comes down to volume, mix, and execution.

Why raw-spread tiers print more per client

Three structural reasons:

**Active traders trade more lots.** A raw-spread account is self-selecting. The client who chooses Raw is typically a scalper, day trader, or algorithmic operator running 20-200 lots per month. The Standard-tier client averages 2-8 lots per month. Even at half the per-lot revenue, a broker that captures the active-trader segment earns 5-25x more per account on commissions alone.

**The execution markup is rarely zero.** Brokers operating an STP (Straight-Through-Processing) or ECN model still touch the liquidity. The broker may aggregate quotes from 8-15 liquidity providers and pass the best bid/ask through. What looks like "raw" is the best bid/ask after the broker's internal markup of typically 0.05-0.15 pips. On EUR/USD that adds USD 0.50-1.50 per round-turn lot of hidden margin. Combined with the explicit USD 7 commission, the all-in broker take is USD 7.50-8.50 per round-turn — not far behind the Standard account.

**Wider-spread instruments shift the calculus.** On exotic FX pairs (USD/MXN, USD/ZAR, USD/TRY) the raw spread is 8-25 pips. The broker's mark-up there can be 1-3 pips, generating USD 10-30 per round-turn before commission. The "raw" label only describes major pairs realistically.

**Negative roll on overnight positions adds a third lever.** Carry-trade swap rates set by the broker on overnight positions typically embed a 1-2 percentage point markup over the underlying interbank rate differential. A client holding a 1-lot AUD/JPY position overnight for 30 days at a 0.5-point swap-rate markup pays the broker USD 150-300 over the holding period. This is invisible at the trade-execution level and is the most under-discussed revenue line in retail forex.

USD-per-round-turn — four EU-regulated raw-spread brokers

A like-for-like comparison on one full lot of EUR/USD on the most-used raw-spread account at each of four EU-regulated brokers we cover. All commission figures are the broker's published per-side commission as of May 2026, converted to USD where the broker quotes in another currency. The "implied total cost" is commission + a conservative estimate of the hidden execution markup of 0.1 pips, which is in the middle of the typical aggregated-quote range.

| Broker | Account | Commission (per side, per lot) | Round-turn commission | Implied total cost incl. 0.1 pip markup | |---|---|---|---|---| | [Pepperstone](/brokers/pepperstone) | Razor | USD 3.50 | USD 7.00 | USD 8.00 | | [IC Markets](/brokers/ic-markets) | Raw Spread | USD 3.50 | USD 7.00 | USD 8.00 | | [Exness](/brokers/exness) | Raw Spread | USD 3.50 | USD 7.00 | USD 8.00 | | [Tickmill](/brokers/tickmill) | Pro | USD 2.00 | USD 4.00 | USD 5.00 |

Tickmill stands out as cheaper per round-turn at the headline level. Whether that translates to actually-lower trading costs depends on the execution quality — a broker with cheaper headline commission but worse fill prices can be more expensive in practice. The [MiFID II RTS 28 best-execution disclosure](/blog/mifid-rts-28-execution-report-what-it-reveals-about-your-broker) is the document that lets you check this.

The execution-latency markup nobody talks about

A subtler revenue lever is execution latency. When you submit a market order, the broker has a few milliseconds to (a) read the current bid/ask from its aggregated feed, (b) compare it to its internal book, (c) fill you against an internal position or pass the order to an LP. Within that window the price can move.

If your order arrives at a moment when the EUR/USD price has just ticked from 1.0850 to 1.0851, the broker can fill you at the worse price (1.0851) and pocket the difference if it filled against its internal book at 1.0850 a millisecond earlier. This is the polite description of slippage. It is also a real revenue line.

Honest brokers publish median and 95th-percentile slippage statistics in their annual RTS 28 disclosure. On EUR/USD the well-run brokers report median slippage of 0.0-0.2 pips on market orders during normal market conditions. The poorly-run brokers either report 0.5-1.5 pips median slippage or — more revealingly — do not publish the statistic at all.

Median 0.1 pip of slippage on a 1-lot EUR/USD market order is USD 1 per side, USD 2 per round-turn. Across a broker's client base that runs into seven-figure annual revenue from slippage alone.

Why a beginner is usually better off on a Standard account

Despite the headline cheaper cost of raw-spread accounts, the math for low-volume traders is rarely in their favour. The break-even point is roughly 5 lots per month at most brokers — below that volume the implicit spread on a Standard account is cheaper than the explicit commission plus residual markup on Raw.

For a casual client trading 1-3 EUR/USD lots per month, the Standard account costs USD 10-30 per month in spread-equivalent revenue to the broker. The same client on a Raw Spread account would pay USD 7-24 per month in commission plus implied markup. The saving is real but small, and is offset by the cognitive overhead of seeing the commission line item on every trade.

This is the inverse of the marketing pitch — raw-spread accounts are typically positioned as "for serious traders" precisely because that is the segment where the broker's revenue is concentrated, not because the account type is materially better for low-volume retail.

The detail of which account suits which client profile is covered on our [standard vs raw-spread account](/questions/standard-vs-raw-spread-account) explainer. The general rule: if you are not trading at least 5 EUR-equivalent lots per month, the Standard account is the right home for you. If you trade more than 20 lots per month, Raw is materially cheaper and the broker still makes more on you than they would on the Standard tier.

What this means for choosing a broker

Three practical implications:

**Compare commission, not headline spreads.** "0.0 pip spread" on the marketing page tells you nothing without the commission disclosed alongside. The relevant question is the all-in USD cost per round-turn for the pair you actually trade. Most brokers will quote you this if asked.

**Read the RTS 28 disclosure.** This is the broker's mandatory disclosure of execution venues and slippage statistics under MiFID II. A broker with a strong RTS 28 disclosure is signalling it can afford to be transparent because its execution is genuinely good. A broker with weak or absent RTS 28 disclosure may have something to hide.

**Watch the swap rates if you hold overnight.** Brokers vary substantially on the markup applied to overnight roll rates. The broker that wins on per-trade cost can lose on swap-rate cost for a position-held-overnight client. Compare swap rates on the specific pairs you hold using our [what is swap rate](/questions/what-is-swap-rate) explainer and the per-broker swap-rate tables published in each [broker review](/brokers/pepperstone).

What we score in our methodology

Our [methodology](/methodology) weights raw round-turn cost at 18% of the fees component, swap-rate fairness at 6%, and execution-quality (slippage statistics from the broker's own RTS 28 disclosure where available) at 9% of the execution component. The exact weights are public and the per-broker breakdown is in each review.

A worked example — the math at retail scale

Consider a hypothetical retail client trading EUR/USD with a EUR 5,000 starting balance, holding individual positions for 4-12 hours intraday (so swap rates do not apply meaningfully), and trading 15 round-turn lots per month. Comparison of the all-in monthly cost across the two account types at Pepperstone:

**Standard account at 1.0-pip mark-up**: 15 lots × USD 10 per round-turn = USD 150 per month in implicit cost.

**Razor account at USD 3.50 per side commission + 0.1 pip implied execution markup**: 15 lots × USD 8.00 per round-turn = USD 120 per month, of which USD 105 is explicit commission and USD 15 is implied execution markup.

The Razor account is USD 30 per month cheaper, a 20% reduction in trading cost. On the EUR 5,000 account, this is 60 basis points of monthly cost saving. Across a year that compounds to EUR 360 — meaningful for an account of this size.

At 5 lots per month the saving narrows to USD 10 per month (USD 50 Standard versus USD 40 Razor) — barely worth the commission-line-item cognitive overhead. At 50 lots per month the saving widens to USD 100 per month (USD 500 Standard versus USD 400 Razor) — material for the broker's profitability and material for the client's costs.

The break-even point for a typical retail client choosing between Standard and Raw on EUR/USD is around 5-7 lots per month at most EU-regulated brokers. Below that volume, the simplicity of the Standard account outweighs the small per-lot saving on Raw. Above 10 lots per month, Raw is clearly the cheaper choice.

What changes when you trade more than EUR/USD

The math above assumes EUR/USD, the most liquid currency pair in the world. Other instruments distort the picture significantly:

**Gold (XAU/USD).** Raw spreads on gold are typically 10-25 pips at retail brokers. The implicit broker markup on a Standard account can reach 30-50 pips (USD 30-50 per lot per side). On a Raw account the markup compresses to 12-18 pips with a per-lot commission of USD 3.50-7.00 per side. For a client trading gold actively the Raw account can deliver 40-60% saving on transaction cost — substantially larger than the EUR/USD case.

**Indices CFDs (US500, GER40, UK100).** Index spreads are typically wider in absolute terms than FX spreads but narrower relative to the underlying volatility. The mark-up on Standard accounts can be 1-3 points; the mark-up on Raw accounts compresses to 0.3-0.8 points with commission. The savings on a per-trade basis are smaller than gold but meaningful for high-frequency indices traders.

**Crypto CFDs (BTC/USD, ETH/USD).** Crypto CFDs typically have wide spreads on both account types because the underlying market is more fragmented and broker hedging is more expensive. The Standard-vs-Raw arbitrage is narrower for crypto than for FX. For active crypto CFD traders the broker's choice of liquidity provider matters more than the account-type distinction.

Why this matters for choosing the right broker

The takeaway is not that one account type is universally better — it is that the cost structure of forex brokers is more complex than the headline "0.0 pip" marketing suggests, and the right choice depends on:

1. The instruments you actually trade 2. The volume you actually trade in lots per month 3. The hold period of your typical position (which determines swap-rate exposure) 4. The broker's specific commission and swap-rate markup on the pairs you care about

For most retail clients the simplest path is: start on a Standard account during the learning period, switch to Raw once monthly volume exceeds 10 lots and you are comfortable parsing the commission line item on the daily P/L. For systematic or algorithmic traders the Raw account is the right choice from day one. For position traders holding overnight for multi-day periods, the swap-rate competitiveness can dominate the per-trade-cost analysis — and that requires reading the broker's swap-rate table for your specific pair.

The detailed swap-rate comparison across the brokers we cover is on each individual broker review page. The methodology weighting for swap-rate competitiveness is at [/methodology](/methodology). For broader context on broker fee structures see [/questions/what-is-the-cheapest-forex-broker](/questions/what-is-the-cheapest-forex-broker).

Risk warning

Trading CFDs and leveraged forex carries a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. Lower per-trade cost on a raw-spread account does not change your underlying probability of profit — it changes the rate at which costs erode your account. The single biggest determinant of retail trading outcome is position sizing, not commission structure.

*This article reflects published commission schedules and account types as of May 2026. Broker fee structures change — always verify the current cost on the broker's own pricing page before opening an account.*