Account types: standard, raw spread, cent

The phrase 'account type' is a label for how a broker splits the cost of one trade into two charges. The first charge is the spread, which is the gap between the price at which you can buy and the price at which you can sell. The second charge is the commission, which is a separate fee per trade. A standard account and a raw spread account are two ways of arranging those two charges. A cent account changes the size of the position rather than the way the charges are split.

On a standard account the spread is wider and the commission is often zero. On a raw spread account the spread is narrower and a commission is added. The total cost can end up close to the same on both. The difference is where the money leaves your account. On a standard account it leaves through the spread. On a raw spread account it leaves through the spread plus a separate commission line.

A cent account shows the same prices as a standard or raw spread account but divides the position size. That means the money at risk on each pip is smaller. The cost per pip is also smaller in proportion. A cent account is not a cheaper account type. It is the same cost structure applied to a smaller position. The label describes the size of the position, not the size of the charges.

To compare account types you need the spread cost and the commission for one round trip at the size you actually intend to trade. A round trip means opening a position and later closing it. The spread is paid once when you open and once when you close, but the quoted spread already covers the full round trip in most platforms. The commission may be quoted per side or per round trip. Brokers vary in how they quote it, so check the platform's fee schedule before you calculate.

The arithmetic is simple. Multiply the spread in pips by the pip value for your position size. That gives the spread cost. Add the commission for the round trip. The total is the cost of that one trade. On 0.10 lots of AUD/USD, the pip value is A$1. A standard account quoting 1.2 pips and no commission gives 1.2 multiplied by A$1, which is A$1.20. A raw spread account quoting 0.2 pips and A$0.70 commission gives 0.2 multiplied by A$1, which is A$0.20, plus A$0.70, which is A$0.90.

If the position is 0.20 lots instead, the pip value doubles to A$2. The same 0.2 pip spread now costs 0.2 multiplied by A$2, which is A$0.40. The commission stays at A$0.70. The raw spread total becomes A$1.10. The standard account total at 1.2 pips becomes 1.2 multiplied by A$2, which is A$2.40. The gap between the two accounts narrows as the position size grows because the commission is fixed while the spread cost scales with size.

The common mistake is to compare only the spread and treat a raw spread account as cheaper by definition. The commission is the other half of the same cost. On a small position the commission can be the larger half. Before choosing, add the spread cost and the commission for one round trip at the size you intend to use. Then compare the totals. If you plan to hold a position for a long time, the commission is paid once and the spread is paid once, so the arithmetic stays the same.

Brokers vary in how they round the pip value, when they charge the commission, and whether the commission is quoted per side or per round trip. The totals in any example differ between brokers and between account types. A broker may also change the spread at different times of day or around news events. That means the comparison you do today may not hold next week. The only reliable method is to recalculate with the figures your platform shows at the moment you trade.

A cent account is useful when you want to trade the same prices with smaller money at risk. It does not remove either charge. It divides the position size, so both the spread cost and the commission fall in proportion to the smaller size. If you are learning, a cent account lets you see how the two charges behave on a live platform without committing a large amount. The account type does not change the market. It changes how the cost is presented and how much money each pip represents.