Account types: standard, raw spread, cent
How the rand cost of a USD/ZAR trade is built
A spread is the gap between the price at which you can buy USD/ZAR and the price at which you can sell it. If the buy price is 18.4200 and the sell price is 18.4000, the spread is 20 pips. A pip is the smallest common step in the quote. For USD/ZAR, one pip is 0.0001. The spread is not a fee that is taken from your account as a separate line. It is built into the prices you trade at. You pay it by entering at a slightly worse price than the midpoint and leaving at a slightly worse price than the midpoint.
The rand value of one pip depends on the size of the position. A standard lot is 100,000 units of the base currency. In USD/ZAR, the base currency is USD. For a standard lot, one pip is worth about R10 when USD/ZAR is near 18.4100. That figure is not fixed. It moves as the exchange rate moves. For 0.10 lots, one pip is worth about R1. For 0.01 lots, one pip is worth about R0.10. This is why the same 20-pip spread costs different amounts in rand on different trade sizes.
Commission is a separate charge. It is not part of the spread. A broker that charges commission adds it to the cost of the trade. The commission can be charged per side or per round trip. Per side means you pay when you open and again when you close. Per round trip means you pay once for the full open-and-close cycle. The two are not the same. A commission of R175 per standard lot round trip is not the same as R175 per side. Always check which one the broker uses before you compare totals.
Why a smaller spread does not always mean a smaller total
A raw spread account shows a spread that is closer to the prices seen between banks. The spread might be 2 pips on USD/ZAR. That looks much cheaper than a 20-pip spread on a standard account. But the raw spread account charges commission on top. The commission is the part of the cost that the standard account has already included in its wider spread. The two accounts are not offering the same product at different prices. They are presenting one total cost in two different ways.
To compare them, you add the spread cost and the commission for the same trade size. Use the same number of lots, the same entry and exit, and the same time of day if possible. If the commission is per side, double it before you add it. If it is per round trip, add it once. The result is the total cost in rand. That total is the number that leaves your account. The spread alone is not the total. The commission alone is not the total.
In the example on this page, the raw spread total is R19.50 and the standard total is R20.00 for 0.10 lots. The difference is R0.50. That is a small difference. It does not mean one account type is always cheaper. Spreads change during the day. Commission rates vary between brokers. Swap or financing charges apply if you hold a position overnight. The only reliable comparison is the total for your own trade size, using the current spread and the current commission.
What the account name does not tell you
A cent account shows prices in cents rather than in whole currency units. The effect is that the minimum trade size is smaller in rand terms. This can make it easier to place a trade with a small account balance. It does not remove the spread or the commission. The cost per pip is smaller because the position is smaller. If you trade the same rand value on a cent account and on a standard account, the spread cost in rand can be similar. The name describes the display and the minimum size, not a discount.
A standard account usually has no separate commission line. The cost is in the spread. A raw spread account usually has a separate commission line. The cost is split. Neither structure is free. A broker earns from the difference between the prices it receives and the prices it gives you, or from commission, or from both. The account type decides how that earning is shown on your statement. It does not decide whether the broker earns.
Before you open any account, check the total cost for one round trip at your intended trade size. Check whether the commission is per side or per round trip. Check whether swap or financing charges apply to positions held overnight. Check whether the broker rounds pip values. These details vary between brokers. The FSCA regulates financial services providers in South Africa, but it does not set spread or commission levels. Payment methods such as EFT, instant EFT and bank cards affect how you fund the account, not the trading cost.
One round trip at 18.4100: R19.50 on both accounts
| Step | Amount | Note |
|---|---|---|
| Standard account spread | 20 pips | The quoted buy price is 18.4110 and the sell price is 18.4090, so the spread is 0.0020, which is 20 pips. |
| Standard account lot size | 0.10 lots | A standard lot is 100,000 units, so 0.10 lots is 10,000 units of USD/ZAR. |
| Standard account cost of the spread | R20.00 | 20 pips × 0.10 lots × R10 per pip = R20.00. The R10 per pip comes from 10,000 units × 0.0001, which is 1.00 USD, converted at about 18.4100 to about R18.41, rounded here to R10 for a simple example. |
| Raw spread account spread | 2 pips | The quoted buy price is 18.4101 and the sell price is 18.4099, so the spread is 0.0002, which is 2 pips. |
| Raw spread account cost of the spread | R2.00 | 2 pips × 0.10 lots × R10 per pip = R2.00. |
| Raw spread account commission | R17.50 | A commission of R175 per standard lot round trip × 0.10 lots = R17.50. This figure varies between brokers. |
| Raw spread account total | R19.50 | R2.00 spread + R17.50 commission = R19.50. |
| Standard account total | R20.00 | R20.00 spread + R0.00 commission = R20.00. |
Brokers may round pip values, charge commission per side or per round trip, add swap or financing charges for positions held overnight, and quote different spreads at different times. The R10 per pip used here is a rounded figure for a 0.10 lot USD/ZAR position at about 18.4100, and the exact rand value changes as the exchange rate moves.
Doing it once, step by step
Work through these steps once with a calculator and a broker's published figures. You will compare two account types on the same trade size and see which total is lower for that single case.
- 01
Write down the trade size in lots
Choose a size you would actually use, such as 0.10 lots. Write it at the top of the page. Every figure that follows must use this same size. If you change the size halfway through, the comparison is no longer valid.
- 02
Find the pip value in rand for that size
For USD/ZAR near 18.4100, one pip is about R10 per standard lot. Multiply by your lot size. For 0.10 lots, one pip is about R1. This figure is rounded. The exact rand value moves as the exchange rate moves.
- 03
Multiply the spread by the pip value
Take the spread in pips from the account you are checking. Multiply it by the pip value from step two. For a 20-pip spread on 0.10 lots, the spread cost is 20 times R1, which is R20.00. This is the spread part of the total.
- 04
Add the commission for the same size
Check whether the commission is per side or per round trip. If it is per side, double it for a full round trip. Multiply the round-trip commission by your lot size. For R175 per standard lot round trip on 0.10 lots, the commission is R17.50. Add it to the spread cost.
- 05
Compare the two totals in rand
Do the same for the other account type. Write both totals side by side. In the example on this page, the raw spread total is R19.50 and the standard total is R20.00. The difference is R0.50. That is the only number that tells you which account costs less for this one trade.
- 06
Check what changes outside the example
Spreads widen at busy and quiet times. Commission rates differ between brokers. Swap or financing charges apply if you hold overnight. Brokers may round pip values. Re-run the steps with the current figures before you decide. The result can change when any of these change.
The mistake most people make here
The common mistake is to compare only the spread and pick the account with the smallest number. A raw spread account can look cheaper because the spread is 2 pips instead of 20, but the commission is charged on top, so the total is what leaves the account. Before choosing an account type, add the spread cost and the commission for the same trade size, and check whether the commission is per side or per round trip. If the total is similar, the account type is mostly about how the cost is presented, not about a free discount.Check yourself
On a raw spread account, the spread is 2 pips and the commission is R175 per standard lot round trip. For 0.10 lots, what is the total cost in rand?
Spread cost: 2 pips × 0.10 lots × R10 per pip = R2.00. Commission: R175 × 0.10 = R17.50. Total: R2.00 + R17.50 = R19.50.
On a standard account, the spread is 20 pips and there is no commission. For 0.10 lots, what is the total cost in rand, and how does it compare with the raw spread total of R19.50?
Spread cost: 20 pips × 0.10 lots × R10 per pip = R20.00. Commission: R0.00. Total: R20.00. The standard account total is R20.00, which is R0.50 more than the raw spread total of R19.50 in this example.
Questions that come up next
What is a cent account, and how does it change the cost?
A cent account shows prices in cents rather than in full rand. The position sizes are smaller, so one pip is worth less in rand. The spread in pips can look the same as on a standard account, but the rand cost per pip is lower because the trade size is smaller. The commission, if any, is also charged on the smaller size. The total cost in rand is lower because the trade is smaller, not because the account type removes cost.
Is a raw spread account always cheaper than a standard account?
No. The spread on a raw spread account is narrower, but commission is added on top. On a standard account, the wider spread already includes the broker's charge. The total cost for the same trade size can be similar on both. Sometimes one is a little cheaper, sometimes the other, depending on the broker and the market. The only way to know is to add the spread cost and the commission for the same trade size.
How do I check if commission is per side or per round trip?
Look at the broker's fee schedule or the contract specifications for the instrument. The wording will say either per side, per trade, or round turn. Per side means you pay when you open and again when you close, so double the quoted figure for a round trip. Per round trip means you pay once for the full open-and-close cycle. If the wording is unclear, ask the broker's support before you trade.
Does the R10 per pip figure stay the same for every USD/ZAR trade?
No. The rand value of one pip changes as the USD/ZAR exchange rate moves. It also depends on the position size. The R10 per pip used in the examples is a rounded figure for a standard lot at about 18.4100. For 0.10 lots it is about R1, and for 0.01 lots about R0.10. Brokers may also round pip values differently. Always check the pip value for your exact trade size and the current rate.
What other costs can appear on a forex or CFD trade?
Some brokers charge swap or financing charges if you hold a position overnight. These are separate from the spread and commission. They vary by broker and by the instrument. Some accounts have inactivity fees or withdrawal fees. The spread and commission are the main costs for a short trade, but overnight positions can add swap. Check the fee schedule for the full list.
How do I open a forex or CFD account in South Africa?
You apply with a broker that accepts South African residents. The broker will ask for identity and address documents. Payment methods usually include EFT, instant EFT and bank cards. The broker must be authorised by the FSCA or operating under a similar licence. The account type you choose affects how the cost is presented, not whether you can trade. Start with the smallest size you can to see how the costs work in practice.
The words used on this page
- spread
- The gap between the buy price and the sell price of an instrument. It is built into the prices you trade at, not charged as a separate line. A wider spread means a higher cost to enter and exit.
- pip
- The smallest common step in a currency quote. For USD/ZAR, one pip is 0.0001. The rand value of one pip depends on the position size and the exchange rate.
- standard lot
- A position size of 100,000 units of the base currency. In USD/ZAR, the base currency is USD. For a standard lot, one pip is worth about R10 when USD/ZAR is near 18.4100, but this changes as the rate moves.
- commission
- A separate charge added by some brokers, often on raw spread accounts. It can be charged per side or per round trip. Per side means you pay on opening and again on closing; per round trip means you pay once for the full cycle.
- round trip
- One complete trade: opening a position and later closing it. The total cost of a round trip includes the spread cost and any commission. Comparing accounts means comparing the total for the same round trip.
- cent account
- An account where prices and position sizes are shown in cents rather than full rand. The trade sizes are smaller, so the rand cost per pip is lower. The spread in pips may look the same, but the total cost in rand is smaller because the trade is smaller.
What to take away
- The spread and the commission are two parts of one total cost. Comparing only the spread can mislead you.
- A raw spread account moves part of the cost into commission. It does not remove the cost.
- For the same trade size, the total cost in rand can be similar across account types. The total is the number that leaves your account.
- Always check whether commission is per side or per round trip, and use the same trade size when comparing accounts.