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Raw spread

Also called raw spreads, raw pricing, interbank spread, core spread, zero-markup spread

Raw spread is the bid-ask gap on an account priced close to the broker's liquidity-provider feed, with little or no markup added. The broker earns mainly through a separate commission per lot instead.

A raw spread looks like the cheapest price on the screen, but it is only half of the bill. The commission is charged separately, so you must add the two together before you compare accounts, size a stop or judge a short-term strategy.

Where a raw spread comes from

Your broker gets its prices from banks and other large trading firms, called liquidity providers. Each one sends a price it will buy at and a price it will sell at. The broker's feed picks the best of each, and the distance between them is the spread you see.

How a broker's feed builds a raw spread from the best bid and best ask of several liquidity providers
Illustrative values. The best bid and the best ask can come from different providers. The raw spread is the gap between those two best prices.

On a standard account the broker widens that distance by a markup and keeps the difference. With raw pricing it passes the quote through with little or no markup and charges a commission, a fixed fee per lot traded. "Raw" is only the broker's name for the account, so a small markup can still be built into the quote. You pay either way. Only the place where the cost appears changes.

A raw spread is not a fixed number. It floats from second to second, tight when many firms are quoting and wider when few are.

What a raw spread costs on one trade

The figures in this section are an illustrative example. You trade 1 standard lot of EUR/USD (100,000 units), so one pip is worth $10. The raw quote is 1.10000 / 1.10002, a spread of 0.2 pips, with a commission of $7 per lot for the round trip (open plus close). A standard account quotes 1.09995 / 1.10007, a spread of 1.2 pips, with no commission.

The drawing below puts both quotes on the same price scale.

Raw spread quote next to a marked-up quote on the same price scale
The marked-up quote contains the raw spread in the middle. The raw quote removes the markup and bills a commission instead.

To compare the two, turn the raw quote into one all-in cost: spread plus commission, expressed in pips.

All-in cost of a raw spread trade: spread plus commission, in pips
Spread cost (0.2 pips at $10 a pip)0.2 × $10= $2
Add the round-trip commission$2 + $7= $9
Convert back to pips$9 ÷ $10= 0.9
All-in cost0.9 pips per round trip

The standard account costs 1.2 × $10 = $12 for the same trade. Raw pricing saves $3 per lot here. On 0.1 lot everything divides by ten: $0.90 against $1.20.

The rule to copy: divide the round-trip commission by the pip value, then add the raw spread. If the result is below the standard spread, raw pricing is cheaper. In this example the commission equals 0.7 pips, so raw only wins while the broker's markup is larger than 0.7 pips. The chart below compares the raw all-in cost with standard spreads from 0.6 to 1.6 pips.

Break-even between a raw spread account and standard spreads from 0.6 to 1.6 pips
Same illustrative example. The raw account's cost stays at 0.9 pips, so it only wins when the standard spread is wider than 0.9 pips.

Reading a raw spread quote and its commission

Your trading platform shows a bid and an ask for each symbol. Subtract the bid from the ask to get the raw spread. Some platforms also show the spread in points. On a five-decimal quote one point is a tenth of a pip, so a reading of 2 means 0.2 pips, not 2 pips.

The commission is never inside the quote. It is charged to your balance as a separate fee per lot. Depending on the broker, the whole fee is booked when you open, or half at the open and half at the close.

This creates a common misread. The floating loss on a new trade shows only the spread, so the trade looks cheaper than it is. Add the commission back in to see where break-even really is.

Why the floating loss on a new raw-spread trade hides the commission and the real break-even
Same example as above, a buy of 1 lot. The platform's floating loss shows 0.2 pips, but price has to rise 0.9 pips from the bid before the trade breaks even.

Checks before you trade on a raw spread

  • Per side or round trip. A commission quoted per side is charged twice, once to open and once to close. Double it before you compare.
  • Commission currency. If the fee is quoted in a currency other than your account's, it is converted, and the amount you pay moves with the exchange rate.
  • Your own hours. Note the spread at the times you actually trade, over several days. An advertised "from" figure is the best case, not the usual one.
  • Cost against target. In the example above, 0.9 pips is a large part of a 5-pip target but a small part of a 50-pip target. The shorter your trades, the more the all-in cost decides the result.

FAQ

Can a raw spread be zero?

Yes, for moments. When the best bid and the best ask from different liquidity providers meet at the same price, the spread shows as zero. It does not stay there, and the commission still applies, so a trade opened at a zero spread still has a cost.

Do I still pay swap with a raw spread?

Yes. Swap is the overnight financing charge or credit for holding a position past the daily rollover. It is separate from both spread and commission, and raw pricing does not remove it.

Does a raw spread protect me from slippage?

No. Slippage is the difference between the price you asked for and the price you were filled at. It depends on how fast the market is moving and how much volume is available, and it can happen on any pricing model.

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