Trading costs get discussed as if there were one number. There are at least four, they behave differently, and only two of them appear on the ticket. Understanding which one a given broker depends on tells you a lot about how it will treat your account, what it will encourage you to do, and where the conflicts sit.
The spread markup
A broker receives prices from its liquidity providers, typically several banks and non-bank market makers aggregated into one book. That raw feed has a spread of its own, narrow on EURUSD during London hours and much wider on an exotic pair at 3am. The broker adds a markup, then shows the result to you. On a raw-spread account the markup is zero or near zero and the broker charges a separate commission instead. On a standard account the markup is the entire revenue line and the ticket shows no commission at all.
Neither model is inherently cheaper. A 0.2 pip raw spread plus $7 per lot round turn works out close to a 0.9 pip all-in spread on a standard account, and which one wins depends on your average trade size and how often you trade. Where the difference bites is in variability: markups are usually fixed in pips while the underlying spread is not, so the all-in cost widens exactly when the market is thin. The mechanics are set out in spreads, markups and commissions and in the bid-ask spread explained.
Commission
Commission is the simplest line to audit because it is stated per lot and charged on both sides. It is also the line most likely to be quoted in a way that is hard to compare. A broker advertising "$3 commission" may mean $3 per side, which is $6 per round turn, or $3 for the round turn. Some charge in the account currency, some in USD converted at their own rate, and a few charge per notional value rather than per lot, which changes the number entirely on instruments that are not standard forex.
For a trader, the useful comparison is total cost per round turn per lot, spread and commission combined, measured on the instruments you actually trade at the hours you actually trade them. Advertised averages are usually taken across the whole session and flatter the broker.
Swap, the line nobody reads
Hold a position past the daily rollover and the broker applies a financing charge or credit. The underlying economics come from the interest rate difference between the two currencies, plus the broker's own markup on that difference. On a pair where the rate differential is small, the markup can be most of what you pay. Hold for weeks and the accumulated swap can exceed everything you paid in spread and commission on the trade.
Swap is also the reason overnight and weekend positions cost more than the arithmetic suggests. Most brokers apply a triple charge on one weekday to account for the weekend settlement, and the practical details of that, plus how spreads behave at rollover, are covered in swap rates explained and spread widening at rollover. Swing traders who ignore swap are measuring their strategy against a cost base that does not exist.
Currency conversion is a fifth quiet revenue line. If your account is denominated in one currency and you trade instruments quoted in another, every profit, loss, commission and swap is converted, usually at a rate that includes a spread of the broker's own. Traders comparing brokers on spread alone often miss this entirely.
Flow: A-book, B-book and the honest version of the argument
Some brokers pass client orders through to liquidity providers and earn only from markup and commission. That is the A-book. Others take the other side of the client's trade internally, which means the client's loss is the broker's revenue and the client's profit is the broker's cost. That is the B-book. Most brokers of any size do both, routing by client, instrument and risk profile, and there is a full treatment in A-book versus B-book.
The B-book has a reputation problem it partly deserves and partly does not. Internalising flow is standard practice at market makers everywhere, it is how a broker can quote a spread on a two-cent trade that no bank would price, and a well-run desk hedges the aggregate rather than betting against individuals. The problem is the incentive at the edges. When revenue depends on client losses, the temptation is to encourage more leverage, more frequency and more instruments where the house edge is widest. What separates a serious operation from a bad one is a documented routing policy and an actual risk desk, which is the subject of broker risk management.
The smaller lines
Inactivity fees on dormant accounts. Withdrawal fees, particularly on international wires where the broker passes on a correspondent charge and adds its own. Deposit fees on card rails where the acquiring cost is high. Conversion on the deposit itself if you fund in a currency the broker does not hold. Financing markups on indices and commodities, which are quoted differently from forex swaps and are often much larger in percentage terms.
None of these are hidden in the sense of being undisclosed. They sit in the fee schedule, and the fee schedule is a page most traders read once at signup and never again. They matter most to the traders who are least sensitive to spread: someone who deposits twice a year, holds long positions and withdraws quarterly may pay more in wires and swap than in trading costs.
What this means when you choose
Take the fee schedule and the contract specifications for the three instruments you trade most. Work out the round-turn cost per lot, the overnight swap in both directions, and the withdrawal cost on the rail you will use. Then check the execution side, because a cheap quote you cannot get filled at is not cheap: slippage and requotes and execution cover how to measure that from your own trade history.
The broker's business model is not a scandal to be uncovered. It is a set of facts that should be legible before you deposit. Firms running on our Broker CRM configure spread markups, commissions, swaps and routing per instrument and per client group, which is precisely why two clients at the same brand can face different costs. Ask which group you are in and what it costs. A broker that will not answer that has answered a different and more useful question.
"Ask a broker where its revenue comes from and how much of it is client losses. The ones with a clean answer give it in a sentence. The ones that change the subject have told you the answer anyway."
— Alex Onta, Executive Director, SINGUARD
Key Takeaways
- Broker revenue comes from spread markup, commission, swap financing and internalised flow, plus conversion and account fees.
- Raw spread plus commission and an all-in spread can cost the same; compare total round-turn cost on your own instruments and hours.
- Swap is the largest cost for anyone holding positions for days, and it is marked up on top of the rate differential.
- B-booking is normal market making; what matters is a documented routing policy and a real risk desk behind it.
Frequently Asked Questions
Do brokers profit when I lose?
Only on the portion of flow they take the other side of internally. On orders passed through to liquidity providers the broker earns the markup and commission regardless of the outcome. Most brokers run both models and route by client and instrument.
Is a zero commission account cheaper?
Not necessarily. Zero commission accounts carry the cost inside a wider spread. Work out the total round-turn cost per lot on both account types using the instruments and trading hours you actually use.
Why did my long-held position cost more than the spread?
Overnight financing. Swap is charged or credited at each daily rollover, typically at triple size on one weekday to cover the weekend, and over several weeks it can exceed the spread and commission paid on the trade.
About the Author
Alex Onta is an Executive Director at SINGUARD. He built eTrader, the terminal, the mobile apps, eTrader Broker, Copytrading, Business and Community, along with the worldwide clustered-server infrastructure it all runs on, with his brother Roman Onta helping on the design, and he leads that division today. Together with Roman he builds the Prop Firm CRM, the Broker CRM, Scalegram and CopySignals, and the two of them carry worldwide compliance, payment processing and international business structuring side by side. He lives and works in Dubai for most of the year. Meet the executive duo leading Singuard's five divisions.