When trading financial markets, the account type that a trader chooses can greatly affect their trading experience and profitability. Two popular account types that traders often compare are Raw Spread Accounts and Zero Spread Accounts. These accounts are similar in some ways but are also different.
They both offer unique advantages and disadvantages, catering to different trading styles and preferences. But which one is better? In this article, we are going to do a raw spread vs zero spread account comparison in an attempt to find out which is better. We will explore the key features, the pros, and the cons of each account type.
What is a Raw Spread Account?
A Raw Spread account is a trading account that provides traders with direct access to interbank market prices. This exposure to the real interbank market prices usually results in some of the tightest spreads for traders, often starting from 0.0 pips. However, brokers typically charge a commission per trade to compensate for the lack of spread markup.
Advantages of Raw Spread Accounts
- Ultra-Tight Spreads – Raw spread accounts offer the lowest spreads available, reflecting real market conditions.
- Transparency – Traders have access to raw interbank prices with no hidden markups, ensuring cost transparency.
- Lower Trading Costs – The minimal spreads can significantly reduce transaction costs, especially for high-volume traders.
- Better Execution – Direct access to liquidity providers often results in faster execution and reduced slippage.
Disadvantages of Zero Spread Accounts
- Commission Costs – While spreads are low, the commission per trade can add up.
- Not Ideal for Some Traders – The commission structure may not be preferable for some traders, especially trading newcomers.
Who is the Raw Spread Account Best Suited For? – Raw spread accounts are best suited for high-volume traders, such as scalpers, day traders, and algorithmic traders. These types of traders execute a large number of trades and require the tightest spreads.
What is a Zero Spread Account?
A Zero Spread Account is a type of trading account where the broker offers zero spreads on certain currency pairs or instruments. Instead of charging a spread, brokers generate revenue through a commission or other fees.
Advantages of Zero Spread Accounts
- No Spreads – The most significant advantage of zero accounts is spreads that spreads are fixed at or near 0.0 pips on selected instruments. This can be beneficial during volatile market conditions.
- Predictable Costs – Knowing the commissions upfront makes it easier to calculate trading costs in advance.
- Transparency – Zero accounts also offer a high level of transparency by revealing the commissions upfront.
Disadvantages of Zero Spread Accounts
- Higher Commissions – Brokers may charge higher commissions to compensate for the lack of spreads.
- Limited Instrument Availability – Zero spreads may only apply to specific currency pairs or instruments.
Who is the Zero Spread Account Best Suited For? – Interestingly enough, zero spread accounts are also best suited for high-volume traders. Traders like scalpers, algorithmic traders, and day traders, in general, may find the absence of spreads on a zero account highly favourable.
Key Differences Between Raw Spread and Zero Spread Accounts
While both Raw Spread and Zero Spread accounts provide low-cost trading options, they differ in their fee structures and how spreads are applied.
Raw Spread Accounts
A Raw Spread account offers traders direct access to interbank market pricing with ultra-low spreads, as brokers do not add any markup to the spread. These spreads are floating, starting from 0.0 pips, but may widen slightly above this level depending on market conditions, such as liquidity and volatility. This account type is often preferred by experienced traders due to its transparency and access to true market prices.
Zero Spread Accounts
Zero Spread accounts, on the other hand, feature spreads that are fixed at 0.0 pips or very close to it, making them highly predictable. However, brokers typically offer zero spreads on a limited number of instruments, which can restrict the trader’s range of options.
Fee Structure
Both account types charge a commission to compensate for the absence of traditional spread markups. However, Raw Spread accounts generally have slightly lower commissions than Zero Spread accounts.
In summary, while both account types are marketed as offering spreads starting from 0.0 pips, Raw Spread accounts are dynamic and suitable for traders seeking flexibility, while Zero Spread accounts cater to those who prioritize cost predictability on specific instruments.
Which Account is Better?
The choice between a Raw Spread Account and a Zero Spread Account depends on a trader’s trading style and preferences. Traders who want direct access to the interbank market and are comfortable paying a modest commission may find the raw spread account best suited for them. In contrast, those who are looking for zero spreads and predictable trading costs would go for the zero spread account.
However, it’s important to note that zero spread accounts typically charge a higher commission compared to raw spread accounts.
Where Can You Find These Accounts?
Several brokers offer both Raw Spread and Zero Spread Accounts, allowing traders to choose the account type that best suits their needs. Some other brokers prefer to offer either the raw spread account or the zero spread account, but not both. In this section, we will look at some brokers that offer these accounts to traders.
Pepperstone
Pepperstone is one of the top brokers for traders looking for a raw spread account. Its razor account offers traders access to interbank market prices, resulting in ultra-low spreads from 0.0 pips. However, this account charges traders a commission that depends on the trading platform a trader uses.
For MetaTrader 4 and 5, the commission is $3.5 or €2.6 or £2.25 or CHF 3.30 per side per lot, depending on the account currency. TradingView and Pepperstone Trading Platform users also pay $3.50 per side per lot, while cTrader traders are charged a lower commission of $3 per side per lot. For TradingView, cTrader, and Pepperstone Trading Platform users with accounts in currencies other than USD, the commission is converted at the prevailing spot rate into their account’s currency. There is no minimum deposit requirement to open a razor account on Pepperstone.
One of Pepperstone’s stand-out features is its deep collection of market products. This broker allows its clients to trade CFDs on forex, commodities, indices, stocks, cryptocurrencies, and ETFs. This allows investors to diversify their portfolios according to their preferences. Additionally, Pepperstone operates under stringent regulatory oversight from several reputable financial authorities. These include the FCA in the UK, the ASIC in Australia, the CySEC in Cyprus, the DFSA in the DIFC, and the CMA in Kenya, among others.
Exness
Exness is one of the top forex brokers in the world that offers both a raw spread account and a zero account. The raw spread account on Exness offers spreads from 0.0 pips plus a commission of up to $3.5 per side per lot. In contrast, the zero account features zero spreads (0.0 pips) on the top 30 instruments with a commission from $0.05 for each side per lot and upwards. Both of these accounts require a minimum deposit of $200.
Exness allows investors to access a variety of market products, including CFDs on forex, cryptocurrencies, metals, energies, indices, and stocks. The broker features several trading platforms to use, including MT4, MT5, Exness Trader app, and Exness Terminal. When it comes to regulations, this broker operates under the supervision of several reputable organisations. These include the FCA (UK), CySEC (Cyprus), FSCA (South Africa), CMA (Kenya), and others.
HFM
HFM is a well-regulated broker that offers traders a zero account. This account has spreads from 0.0 pips on forex and gold with a commission of $3 per side per lot. This account offers traders all the trading instruments available on HFM. These include CFDs on forex, metals, energies, indices, stocks, commodities, bonds, ETFs, and cryptocurrencies. There is no minimum deposit required to open a zero spread account on HFM.
Notably, HFM has a variety of trading platforms available from which traders can choose. These include MetaTrader 4 and 5, as well as its proprietary HFM Platform. This broker holds regulatory licenses from multiple respected financial authorities, including the FCA, the CySEC, the FSCA, and the DFSA. This ensures a robust framework of compliance and security for its clients.
Tickmill
Tickmill offers its traders two different raw spread accounts. Both of these accounts feature spreads from as low as 0.0 pips with a different commission depending on the account. The commission is $3 per side per lot on the Raw account and $3.5 per side per lot on the Tickmill Trader Raw account. The minimum deposit to open an account on Tickmill is $100.
This broker offers access to various global markets. Specifically, investors can trade forex, stock indices, metals, bonds, commodities, and cryptocurrencies. The trading platforms available to use include MT4, MT5, and mobile apps. Finally, this broker has great regulatory oversight, holding licenses from the FCA, the CySEC, the ASIC, and the FSA in Seychelles.
Axi
Axi is another broker where traders can access zero spread accounts. The pro account offered by Axi features spreads from as low as 0.0 pips and charges a commission of $7 per round trip. Notably, Axi has only a $5 minimum deposit requirement on this account.
However, the broker also offers the elite account that requires traders to have a balance of at least $25,000. This account also features spreads from 0.0 pips plus a commission of $3.5 per round trip. Interestingly, the broker requires traders to maintain their balance above the minimum $25,000. If the balance falls below that, the broker gives investors 15 days to bring their accounts back above $25,000. Otherwise, they will downgrade the account to a pro account.
The trading instruments available on Axi cover a wide range of global markets. Here, investors have access to CFDs on forex, shares, indices, commodities, and cryptocurrencies. To trade these instruments traders can use MetaTrader 4 platform alongside its own Axi Trading Platform. Regarding regulations, Axi operates under the watch of the ASIC, the FCA, and the FSA in St Vincent and the Grenadines.
Closing Remarks
Both Raw Spread and Zero Spread Accounts offer distinct advantages tailored to different trading styles and preferences. Raw Spread Accounts provide ultra-tight spreads and direct access to interbank market prices. On the other hand, Zero Spread Accounts often eliminate spreads entirely on selected instruments, offering predictable costs and transparency.
The choice between the two ultimately depends on a trader’s specific needs, trading volume, and preference for commission structures. Brokers like Pepperstone, Exness, HFM, Tickmill, and Axi are some of the top forex brokers that provide these account types.
Nonetheless, there are many other brokers in existence who offer these accounts. Whether you opt for a Raw Spread or Zero Spread Account, it’s crucial to choose a reputable broker. Remember to always do your own thorough research and evaluate the broker’s features to ensure they meet your needs.
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