Lesson 15 — Commission Models

Meet Commission Models — The “Price Tag” of Every Trade

Imagine going to a space café where every coffee has two price options:

1. Normal price, with a tiny “service fee” baked in
2. Raw price, but you pay a small fee at checkout

Welcome to spread vs commission in Forex — the cosmic menu of trading costs.

Commission models shape your trading expenses, especially if you trade frequently. Understanding them helps you avoid feeling like you’re paying extra for lunar air.

Diagram/Table Idea (Visual #1 — Spread vs Commission Comparison)

A simple two-column diagram.
Left column shows an icon representing a spread-only account.
Right column shows an icon representing a raw spread + commission account.
No text inside the diagram — only shapes, arrows, or icons illustrating two different cost structures.

How Commission Models Work

1. Spread-Only Accounts

You don’t pay a separate commission — the broker widens the spread slightly.
Think of it like buying popcorn where the price already includes the bucket fee.

2. Raw Spread + Commission Accounts

These accounts offer near-zero spreads, but you pay a fixed fee per lot.
This is like paying the movie ticket separately from the popcorn — you see exactly what each part costs.

3. Typical Commission Costs

Most Forex brokers charge a fixed commission per lot, often quoted per round turn (open + close).
Amounts vary, but the concept stays the same:

• You pay a clear, transparent fee each time you trade.

4. Impact on Trading Styles

Different traders feel these costs differently:

• Scalpers: benefit from raw spreads, because every tiny pip matters
• Swing traders: may prefer spread-only accounts since they trade less often
  No risk modeling, no swap strategies — just the essentials.

Diagram/Table Idea (Visual #2 — Cost per Lot Example)

A table-style graphic showing two rows:
Row 1: “Spread-only” represented with shapes/icons
Row 2: “Raw + commission” represented with shapes/icons
Columns represent Entry cost, Exit cost, Total cost, but without text — only symbol placeholders to indicate differences.

Why This Matters in Real Trading

Commission models directly influence your long-term trading cost — and your profitability.

Pros of Spread-Only Models

• Simple cost structure
• Good for traders who value convenience
• No separate commission charge

Cons of Spread-Only Models

• Spreads are wider
• Scalpers lose efficiency
• Less transparent cost breakdown

Pros of Raw Spread + Commission

• Tighter spreads
• Transparent and precise costs
• Often preferred by active traders

Cons of Raw Spread + Commission

• Commissions add up for high-frequency trading
• Requires cost awareness
• Slightly more complex structure

💡 Tip: If your strategy depends on tight entries, test both models — the difference in spread alone can change your performance.
📌 Note: Some brokers offer multiple account types — choosing the wrong one is like paying for a gym membership when you just wanted the sauna.
🤓 Did You Know? Commissions are always fixed per lot, but spreads are floating — this makes raw accounts more predictable in fast conditions.

Diagram/Table Idea (Visual #3 — Cost Comparison Breakdown)

A three-section diagram:

1. Spread component
2. Commission component
3. Total cost bar
   All shown as simple bars or blocks with different sizes, no text inside — visually displaying how each part contributes to the final cost.

Key Takeaways

• Spread-only = cost included inside the spread.
• Raw accounts = ultra-tight spreads but with fixed commissions.
• Scalpers usually prefer raw accounts; swing traders may prefer spread-only.
• Commission per lot is fixed; spread cost varies with the market.
• Choosing the right model depends on how often you trade and how precise your entries must be.

Thumbnail Idea

A comic-style astronaut comparing two glowing floating panels:
One panel shows a wide bar (spread) and no fee icon; the other shows a tiny bar (raw spread) plus a small fee icon.
Space backdrop with subtle stars and nebula, single unified scene, no text.