Raw Spread
What is Raw Spread in Trading?
A raw spread is the direct market spread that a broker offers without any additional adjustments. In simple words, it shows the real difference between the bid price (sell price) and ask price (buy price) that comes straight from liquidity providers.
This means traders see the lowest possible spreads, often starting from 0.0 pips, but usually pay a small commission on each trade.
Example of Raw Spreads
Suppose EURUSD is quoted at:
- Bid price: 1.10201
- Ask price: 1.10203
The raw spread here is 0.2 pips. This is much tighter than what you may see in a standard account.
Raw Spread vs Standard Account
- Raw spread account: You get tighter spreads (sometimes as low as 0.0 pips on major currency pairs) but pay a separate commission fee for each trade.
- Standard account: The broker usually adds a small markup to the spread, so it looks wider, but you don’t pay a separate commission.
Many traders compare the raw spread vs the standard account to decide which works best for their trading style.
Why Raw Spread Accounts Matter
- Transparency: You see the actual market prices with no hidden markups and faster execution.
- Better for Scalping: Small spreads are helpful for strategies that rely on quick entries and exits.
- Flexibility: In a forex trading account, having raw spreads can make trading costs clearer and more predictable.
Other Glossary Terms
R
- Risk Management
Risk management in trading means using rules and tools to limit losses, protect your capital, and ensure one bad trade doesn’t wipe out your account while aiming for steady gains.
- Risk-to-Reward Ratio
The risk-to-reward ratio measures how much a trader risks compared to potential gain in a trade, helping assess whether the potential reward justifies the possible loss.
- Resistance Level
A resistance level is a price point where upward movement often stalls, acting like a ceiling that prevents the market from rising further until strong buying breaks through.
- Retail Trader
A retail trader is an individual who trades financial markets with personal funds through online platforms, unlike institutions that trade large capital for clients or organizations.
- Range Trading
Range trading is a strategy where traders buy near support and sell near resistance, aiming to profit from price movements within a sideways market or defined trading range.
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