Nowadays, many forex brokers offer various types of forex trading accounts. As mentioned in the eightcap review, two of the most popular options available are standard trading and raw spread trading accounts. After gaining experience in forex trading, beginners may opt for a micro or mini account as a starting point, but when it comes time to improve their trading environment, they will have to select between a raw spread and a standard account.
In reality, each forex broker has the authority to design its own set of terms & conditions for its trading accounts. Standard trading accounts with multiple brokers would most likely have varying fees, margin requirements, maximum leverage, and so on, depending on the broker. The same can be said for the raw spread account. Due to this, it is difficult to determine which form of account is preferable without first determining with which broker you intend to register for forex trading.
Here is where it all boils down to whether raw spreads or normal trading accounts are preferable in the long run.
What is a standard trading account?
Forex trading platforms do utilize different terms for their forex trading account kinds. As a result, a standard account is likely to be the same as a regular account. To open a standard account, you must have a minimum deposit of $100. In other words, while FX accounts may go by different names, they all contain the same tools and features in most cases.
What is a raw spread account?
One of the most vehement debates in the foreign currency market is the difference between raw and zero spread. If you have the highest appropriate forex trading circumstances the financial market offers, you are said to be trading with a raw spread. It is advantageous because it provides you with the true underlying value of the items rather than a markup price.
A raw spread account provides real-time market pricing for all instruments. Because forex brokers do not charge a markup on asset pricing, spreads are typically extremely low, if not completely zero. On the other hand, traders must pay a greater commission price for each deal that is done. Some forex brokers charge fees for every opening and closing trade, but others may charge costs after a full round-turn has been completed.
Consider the following scenario: you wish to purchase the GBP/USD currency pair, presently trading at 1.3160. If you have a raw spread trading account, you will most likely be able to purchase it at 1.3160. As soon as the price reaches a certain level, you will be able to close the position with a significant profit (Although you must ensure that the profit will equal the commission cost as a minimum).
Which trading account is better?
Each forex trader may have a different take on the matter. Raw spread trading accounts are better for scalpers who want to profit from small changes in asset prices. On the other hand, standard trading accounts may be better suitable for swing and position traders. Short-term tactics rely heavily on precise pricing. However, long-term techniques can give you more options for choosing trading accounts.