Andrew Mastykin · Follow
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Raw spread accounts are preferred by experienced scalpers and day traders who understand the market dynamics, order type, and the impact of high market volatility. Standard accounts are more suitable for beginners because they are less affected by volatility and have relatively fixed spreads.
One of the many challenges Forex traders face, especially beginners, in the financial markets is choosing between a raw spread and a standard account. Understanding the differences and choosing the account type that suits your trading style can significantly shape your trading journey. So, in this article, we will unveil the details between raw spread vs. standard accounts, the distinct pros and cons of each account type, and the best account type for a beginner.
A standard account is a flexible trading account that typically offers traders standard trading conditions. It offers traders access to various markets like stocks, Forex, indices, and commodities. Besides, it also offers higher leverage, which enables traders to open larger trade positions with smaller capital. Finally, spreads and commissions in standard accounts vary for different brokers. Generally, spreads are higher albeit with lower or no commissions.
👍 Pros
•Higher Leverage: Higher leverage allows traders to open larger positions with little capital. This offers traders the opportunity to make significant profits from the market, regardless of their account size.
•Less Market Volatility: Standard accounts are less affected by market volatility because the broker acts as a market maker.
•Commission-free: Trades open on standard accounts are typically free from commissions charged by brokers.
👎 Cons
•Wider Spread: Standard accounts have a wider spread, which could impact profitability.
•Increased Risks: While high leverages offer traders the opportunity to make significant profits with limited capital, it also increases the chance of losing capital with few bad trades.
Raw spread in Forex represents a type of trading account that offers traders the real cost of executing a trade, which reflects the interbank rates in the financial markets. Essentially, brokers that offer raw spread accounts do not add markups to the spreads, thereby allowing traders to trade with tight market spreads.
👍 Pros
- Transparency: Traders get the actual cost of trading without hidden charges or markups on spreads.
- Lower Trading Costs: Brokers with raw spreads offer traders the opportunity to trade at lower costs.
- Fast Market Execution: Raw spread account also offers faster market execution, which makes it suitable for high-frequency trading.
👎 Cons
- Hidden Charges: Some brokers may charge higher commissions and swap fees to make up for the zero-cost spread.
- Market Volatility: Traders may incur severe losses from a sudden increase in market volatility.
Forex traders approach the financial market differently. So, choosing between standard and raw spreads is dependent on a trader’s preference and style of trading. However, here’s a breakdown of standard account vs. raw spread to help beginner traders make better choices:
Raw Spread Accounts are widely preferred by experienced scalpers and day traders who understand the market dynamics, order type, and the impact of high market volatility. So, raw spread accounts generally suit experienced traders with high trading frequency like scalpers and day traders because of the tighter spreads
On the other hand, standard accounts are more suitable for beginners because they are less affected by volatility and have relatively fixed spreads. The fixed spread offered by standard accounts is crucial for beginner traders to calculate how much they are willing to lose should a trade position go contrary to the direction of the projected analysis.
Furthermore, unlike a raw spread account that requires bigger trading capital; a standard account requires small capital, which makes it affordable and more suitable for beginners.
Your capital is at risk.
Exness Trading Company has been working in the Forex market since 2008. The broker’s activity is managed by Nymstar Limited, a company registered in the Republic of Seychelles. The service is regulated by licenses of CySEC (Cyprus Securities Commission), FCA (Office of Financial Regulation and Supervision of Great Britain) and FSA (Office of Financial Regulation and Supervision of the Republic of Seychelles). The broker holds the leading position in Forex ratings. The company’s monthly trading turnover totals $325.8 billion USD. The broker currently has CFDs available for cryptocurrency, stocks, more than 120 currency pairs, energy and metals. Exness’s service provides favorable working conditions for traders: low commission, instant execution of orders and withdrawal of funds. An infinite leverage makes it possible to earn on small deposits up to $999. There are several options for opening an account depending on the traders’ needs. A demo account is available — a training account that is useful for both beginner level traders and professional traders.
Your capital is at risk.
75.93% of retail investor accounts lose money when trading CFDs with this provider.
IC Markets Trading Company was founded in 2007 in Sydney, Australia. The broker is licensed under the Australian Financial Services License (AFSL) and the Australian Securities and Investment Commission (ASIC). The broker is also a member of the Australian Financial Complaint Authority (AFCA), the governing body that sets the industry standard for the resolution of disputes between consumers and financial service providers, and regularly undertakes audits.
Your capital is at risk.
FP Markets has provided clients with access to trading on the Forex market since 2005. More than 10,000 trading instruments are available to traders. The broker is attractive due to its favorable trading conditions, super-fast order execution, popular trading terminals, and low spreads. FP Markets is monitored by respected regulators that inspire customer confidence. The transparency and reliability of the company is guaranteed by the supervision of the Australian Securities and Investments Commission — ASIC (license number 286354) and the Cyprus Securities and Exchange Commission — CySEC (license number 371/18). The company also has a registration and an office in the state of Saint Vincent and the Grenadines (SVG FSA). The FP Markets official website contains a lot of useful information about the company, Forex trading, training, analytics, answers to frequently asked questions, a trader’s blog, and much more. This training treasure trove will help you improve your level of expertise.
Your capital is at risk.
RoboForex is a brokerage company that was founded in 2009. It provides services to financial markets in 169 countries. More than 3.5 million users are RoboForex clients. RoboForex is the leading software developer in the Forex industry.
RoboForex is recognized as a reliable partner by the most respected financial market experts. The company has won numerous prestigious awards. The RoboForex group of companies has an international license to provide services from FSC Belize, and a European license from CySEC (license No. is 191/13 Robomarkets Ltd).
Your capital is at risk.
Tickmill brokerage introduces a new standard in the provision of brokerage services. The focus on innovation is what the company is proud of and why traders choose it. The trading conditions of the broker are appreciated by fans of scalping and passive trading with the help of robots because Tickmill provides minimal spreads. The company has earned many awards. Thus, for two years in a row (2018 and 2019), it was awarded the “Best Execution Broker” title, and it also won the “Most Transparent Broker” title in 2019.
Your capital is at risk.
The Admiral Markets broker company commenced operations in 2001. The broker’s activities are registered and licensed by the Australian Securities and Investments Commission (ASIC). Admiral Markets now operates in more than 40 countries with a cash cycle of up to USD 40 billion. The broker holds a lifetime license issued by the Federal Financial Markets Service. It is also regulated by the Financial Conduct Authority (FCA). Access to the FX+Project as one of their specific features. In 2002 Admiral Markets was awarded the “Forex 2012” (“Best of the Best”) by The New Europe Magazine.
The advantages of raw spread accounts include tighter spreads, fast market execution, lower trading costs, suitability for scalping, and transparency in pricing.
The difference between raw and zero spread accounts lies in the trading commission a broker charges for opening an order. Commission for zero spread accounts is typically higher than that of raw spread accounts, which is calculated based on the lot size.
Account type for trading depends on the trading style and goals of a trader. For instance, a zero spread account tends to appeal to high-frequency traders and scalpers, while the standard account is more suitable for beginners due to fixed spread and low market volatility.
A standard account is the most suitable account type for beginners.
