Trading Costs · Explained
Two brokers can both advertise "low-cost trading" and still have very different real costs. The difference comes down to whether you pay through the spread or through a commission.
It's easy to miss if you only compare headline numbers. Here is how the two pricing models work and how their cost compares as your trading volume grows.
How each pricing model works
| Pricing Model | How You Pay | Typical EUR/USD Cost |
| Spread-only | The cost is built into a wider gap between the buy and sell price. There is no separate fee. | 1.0 to 1.5 pips all-in |
| Commission-based | A fixed fee per lot on top of a much tighter spread. | 0.0 to 0.2 pips plus $3 to $7 per standard lot round-turn |
Spread-only pricing hides the cost inside the price. You never see a separate charge, but you pay the cost on every trade. Spreads can also widen during volatile conditions, often just when you need to act.
Commission-based pricing is transparent. You can see the cost of each trade before you place it. That doesn't make it cheaper by default: the fee still applies to every lot you trade.
What the cost looks like over a month
Illustrative example only. It assumes EUR/USD at $10 per pip per standard lot, a 1.2 pip spread-only account, and a 0.1 pip spread plus $6 round-turn commission account.
| Monthly Volume | Spread-only (1.2 pips) | Commission (0.1 pip + $6) |
| 10 lots | $120 | $70 |
| 50 lots | $600 | $350 |
| 200 lots | $2,400 | $1,400 |
Any gap in cost per lot gets multiplied by every lot you trade. A small difference per trade can become a large difference by the end of the month.
Your trading style decides which model fits
Scalpers and high-volume traders feel the per-lot cost most, so tight spreads plus commission are usually worth comparing first. Traders who place fewer trades may prefer the simplicity of a single all-in spread.
Both models charge their cost once per trade, however long you hold the position. Swing traders should also check overnight swap rates, which can matter more than the spread over a multi-day hold.
Conclusion
There is no universally cheaper model, only the one that matches how often and how you actually trade. Running the numbers on your own trade frequency takes about ten minutes and gives you a clearer answer than any headline rate.
Should you have any questions about our account types, please do not hesitate to contact our support team.
Trading CFDs and other leveraged products carries a high level of risk and may not be suitable for all investors. Figures shown are illustrative and do not represent actual VCG Markets pricing.
