Account types: standard, raw spread, cent

A standard account charges you through the spread alone. The spread is the gap between the price at which you can buy and the price at which you can sell. You pay it without seeing a separate line on your statement, because it is already inside the two prices you are quoted. On this account type there is no commission line at all.

A raw spread account charges you in two places. The spread is narrower, so the gap between buy and sell is smaller. A commission is then charged on top, usually when you open the position and again when you close it. The commission is the part that appears as its own line. The spread is still there, just smaller.

A cent account changes a different thing. The spread and any commission are charged in the same way as on the account it is based on. What changes is the size of the position you are trading. One tenth of a standard lot means each pip is worth one tenth as much. The cost per pip is unchanged. The number of pips you are exposed to is unchanged.

This is why the three account types cannot be ranked by looking at one number. A raw spread account is not cheap because the spread is small. A standard account is not expensive because the spread is wide. A cent account is not cheaper because the money at risk is smaller. Each label describes where the cost sits or how big the position is, not how good the deal is.

A round trip means you open a position and later close it. The cost of that round trip is what you are comparing, because a spread is paid once on the way in and once on the way out. Take a standard account with a 1.2 pip spread on EUR/USD. If one pip on one standard lot is worth KSh 1,085, the spread cost is 1.2 multiplied by KSh 1,085, which is KSh 1,302.

Now take a raw spread account on the same instrument and the same position size. Suppose the spread is 0.4 pips and the commission is KSh 300 for the round trip. The spread cost is 0.4 multiplied by KSh 1,085, which is KSh 434. Add the commission: KSh 434 plus KSh 300 is KSh 734. The raw spread account costs less on this trade, but only because the commission is smaller than the spread saving.

Change the commission and the answer changes. If the round-trip commission were KSh 900, the total would be KSh 434 plus KSh 900, which is KSh 1,334. That is more than the standard account's KSh 1,302. The spread did not change. Only the commission did. This is the comparison that matters, and it is made in shillings, not in labels.

The same arithmetic works at any position size. If you trade one tenth of a standard lot, one pip is worth KSh 108.50. On the standard account, 1.2 pips multiplied by KSh 108.50 is KSh 130.20. On the raw spread account, 0.4 pips multiplied by KSh 108.50 is KSh 43.40, plus the commission, which is usually charged per lot and so falls to roughly KSh 30 if the broker scales it. Ask the broker whether the commission scales with size, because not all of them do.

The spread you see on a platform is not fixed. It can widen when markets are busy or quiet, and it can widen around news. The figure you compare should be a typical spread for the hours you actually trade, not the best figure on the broker's page. If you trade at a quiet time, the spread may be wider than the example. If you trade at a busy time, it may be narrower.

Commission can be charged per side rather than per round trip. A commission of KSh 150 per side is KSh 300 for the round trip. Read the contract specifications to see which basis the broker uses. Some brokers also charge a swap if you hold the position overnight. A swap is a separate cost and is not part of the spread or the commission. If you close before the daily cut-off, no swap applies.

Currency conversion is another detail. Your account may be funded in shillings while the instrument is priced in another currency. The broker converts at its own rate, and that rate varies between brokers. The pip value in shillings therefore varies too. Use the pip value your own platform shows for your account, not a figure from a different broker's page.

Regulation matters here as well. In Kenya, brokers that serve retail clients are regulated by the CMA. Check that the firm you are comparing is authorised before you compare its prices. A lower cost is not useful if the firm is not permitted to serve you. Payment into the account is usually by M-Pesa or bank transfer, and the method can affect how quickly your money arrives, though it does not change the trading cost.