Michael Stark is one of the trading specialists at Exness Insights, where he shares his knowledge through strategy articles, in-depth analyses, and podcasts. With over 12 years of experience in the stock and forex markets—and a focus on CFDs since 2013—he combines practical trading knowledge with a strong analytical approach as an associate member of the Society of Technical Analysts.
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In this article, Michael Stark, trading specialist at Exness Insights, shares a detailed guide on what you should consider before choosing a trading account that meets your trading needs.
In recent years, most brokers have begun offering a much wider range of pricing models for trading contracts for difference (CFDs). There are different average spreads for different account types, and most brokers now offer commission-based accounts with no spreads.
How can you choose between them, and why should you look beyond the default account? In this article, I'll share my perspective on these questions. Throughout my experience trading CFDs, I've achieved significant savings by calculating when it's beneficial to switch accounts and doing so on several occasions.
However, what has worked for me won't necessarily work for you: this article is simply my opinion, not a recommendation to change your account or strategy. Nevertheless, I hope it can provide a useful starting point for your own research into what best suits you. I believe you'll also find transferable lessons from my approach when testing different accounts, even if you do so in at least a slightly different way.
Basic strategies for trading CFDs and what you need to make them work
Most of the time, the account you should use for CFD trading depends on your preferred strategy. There are many ways to group trading strategies, but here I'm focusing primarily on time-based strategies, as I believe they have the greatest influence on choosing the type of price action and account you want to use. There are three main time-based strategies for CFD trading, some of which have subcategories.
Scalping
Scalping aims to capture very short-term intraday price movements in liquid instruments, often major forex pairs and gold, with each trade typically held for minutes or even just a few seconds. Scalpers usually focus on lower timeframes, M5 and sometimes even M1. Reliable execution and low spreads are probably the most important factors for scalpers; however, within scalping, there are two main sub-strategies.
Momentum scalping typically aims to track significant price movements on lower timeframes that last for more than a couple of minutes. News scalping seeks to capitalize on large price movements surrounding important data releases, such as NFPs or central bank meetings, which can often offer good CFD trading opportunities.
Almost all scalpers focus on finding low spreads or no spreads whenever possible, as trading costs can significantly impact a strategy that requires many positions to function effectively. However, how critical no spreads are depends on the specific approach. Momentum scalping might favor commission-based accounts with zero spreads, but this depends on how much the price typically moves outside the spread while trades are open; news scalping might also favor commission-based accounts, but this too depends on how stable spreads are during news events.
Day trading
Day trading involves holding most or all of your positions for less than a full day, typically from one hour to a few hours during the main trading session of the instrument being traded, and often around news events. The core idea behind day trading is that if an instrument starts moving clearly in a particular direction during its main session, it will often continue to do so for most of the session, unless there is surprising news or data.
Day traders are generally less sensitive to CFD trading costs compared to scalpers because they always hold positions beyond the spread, or at least aim to do so, and almost always use a smaller absolute number of positions compared to scalpers. In my experience with day trading, I haven't seen a significant difference in total trading costs between spread-based and commission-based accounts, so I believe the choice between one or the other usually comes down to personal preference.
Swing trading and position trading
Swing trading typically involves holding positions for two to four days, aiming to capture the continuous main movement on daily charts, while position trading is similar but longer-term, sometimes lasting several weeks. Traditionally, these approaches don't mind large spreads within reason, because holding positions long-term means each individual trade has significantly greater profit and loss potential compared to day trading and much greater than scalping. In modern times, spreads are a negligible proportion of the total profit or loss on each swing trade.
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Typical account categories
There are many different types of accounts for trading CFDs with different pricing models, so I can't cover every single option you might see from each broker here, but the vast majority of available accounts should fit into one of these categories.
Most of the time, the core features of trading with a broker won't change significantly between accounts. In my experience, brokers that offer negative balance protection consistently provide it across all account types, but be aware of the difference between "pro" accounts and accounts for "professional traders" as defined by regulators. Some brokers also offer benefits like instant withdrawals and adaptive stop-out (also known by various other names); again, these typically apply to every account type a broker offers.
In some cases, you may notice that individual cryptocurrencies or stocks may not be available for trading on zero-spread accounts. This is an exception, not the rule, but it's something to check and consider before opening this type of account.
Standard/default
Standard accounts are the "normal" accounts that new clients are expected to open when registering with a broker. They typically have low minimum deposits, the highest spreads of all the major account types, and access to all the instruments offered by the broker. The main advantage of this type is that it provides access to trading with a relatively low deposit, usually less than USD 200 and sometimes as low as USD 5.
Zero spread
Zero spread accounts, or simply Zero accounts, are commission-based and have no spreads on many of the most popular instruments, as well as significantly reduced spreads on others. Keep in mind that some particularly rare exotic pairs and less popular individual stocks when trading CFDs, such as the pound-koruna (symbol GBPSEK) or Thermo Fisher Scientific Inc (symbol TMO), will always have some spread even on Zero accounts.
How low the spread is compared to standard accounts depends on the broker. The main advantage of Zero accounts is for high-frequency traders and scalpers, as it effectively eliminates the small initial loss on each trade due to the spread when opening a position, transferring this cost to a commission instead.
Raw spread
There are various names for accounts that have both spreads and commissions for most instruments, but "Raw Spread" and its variations are the most common. This type is a middle ground between standard and Zero accounts, as you'll pay both costs, but each will be lower than with accounts that use only spreads or primarily commissions. Raw Spread accounts can offer flexibility when using diverse CFD trading strategies.
Classic/pro/premium
Again, there are many names for this type of account, which is characterized by having no commissions, lower spreads than standard accounts, and a higher minimum deposit. For me, this is the most commonly used type because I usually swing trade CFDs and only rarely scalp or day trade, so I don't usually mind meeting the minimum deposit.
Some brokers also offer an additional type of account that might be called "classic pro," "premium pro," or something similar. It's usually like a classic account but with a higher minimum deposit and a lower spread. Personally, I've never traded with one of these accounts, but I might try it if I trusted the broker enough to deposit a relatively large amount and planned to stay with them for a while.
Important note: Classic or pro accounts are different from professional trader accounts, as defined by the European Securities and Markets Authority (ESMA) and other regulators. If you register with a broker as a professional trader and pass the suitability test, you will typically waive some or all of the legally mandated protections offered by the broker, depending on the jurisdiction. I strongly suggest not registering as a professional trader unless you are absolutely clear about the potential risks of losing negative balance protection and possibly other protections.
Calculation and comparison of costs for operating with CFDs
I believe that calculating the theoretical costs of typical trades you might make on different account types is an excellent starting point for choosing one. This involves using the broker's trader calculator to find the spreads and commissions for each instrument based on the volume you would trade on the various account types, and then adding the results together. This usually gives me a good basis for practical testing, although advertised or theoretical spreads aren't always entirely reliable. Here's an example of my calculation for gold (XAUUSD) in 2018 with a particular broker:
| Account type | Theoretical average spread (pips) | Average theoretical cost of the spread (one standard lot) | Commission | Total theoretical average transactional cost (one standard lot) |
| Standard | 30 | $30 | NONE | $30 |
| Zero | 2 | $2 | $16 | $18 |
| Raw | 11.3 | $11.30 | $7 | $18.30 |
| Pro | 18.8 | $18.80 | NONE | $18.80 |
*All these figures are personal, historical and for indicative purposes only.
On paper, it seems clear that a Zero account is the cheapest. However, in almost every case, the actual spread I paid for any position was at least slightly different from the average advertised by the broker.
My individual circumstances: analysis of real transactions
Here's the tricky part: definitively determining which account is right for me requires some time and effort to calculate the actual spreads I've paid and the real difference in total cost between these and a potential new account type. It's not as easy as calculating it theoretically, but I've definitely found that, in my case, it's worth it in terms of long-term money savings. My usual approach to doing this is to first average all the actual spreads for an instrument over a given period, usually at least a month, and then recalculate on this basis to see how different the results are. This is how it worked for me with gold at the same broker in 2018:
| Account type | Theoretical average spread (pips) | Average theoretical cost of the spread (one standard lot) | Commission | Total theoretical average transactional cost (one standard lot) |
| Standard | 36 | $36 | NONE | $36 |
| Zero | 5 | $5 | $16 | $21 |
| Raw | 13.8 | $13.80 | $7 | $20.80 |
| Pro | 19 | $19 | NONE | $19 |
*All these figures are personal, historical, and for illustrative purposes only. This is not a personalized recommendation to switch between account types.
By performing this calculation myself, based on my actual trading activity, the actual spreads paid, and the actual spreads observed in the market across other account types (not just the advertised theoretical spreads), I discovered that a Pro account was actually slightly better for me to trade gold than a Zero or Raw account. After performing the same process for the other main instruments I was trading at the time (primarily euro-dollar, cable, pound-yen, and pound-New Zealand dollar), this finding was generally consistent, so I stayed on a Pro account and, over time, saved a decent amount of money on trading costs.
Other important individual circumstances
In 2018, I generally paid higher spreads than the theoretical average because I tended to trade more around news events and during periods of higher volatility, but in other situations, the opposite might be true. That's why I believe it's really important to use real historical data for the calculation. While I must admit this is somewhat laborious, the results are much more reliable.
Sometimes I noticed that the actual spreads, whenever I wanted to trade, were significantly higher on average than the average spread advertised by a broker. This damaged my confidence in the brokers involved, but that's not always fair. Higher spreads around news events are inevitable to some extent; the extent depends on the broker's competence and honesty in advertising.
For example, a broker I tested for a while in 2017 advertised "zero spreads with no commission" on all its accounts. This was technically correct in that, at certain times in the middle of the night GMT, it was possible to find zero spreads for the euro-dollar pair for a few seconds. However, that "from" was doing a lot of the work there, because I ended up paying tens, or in one case almost 40 pips, to trade the euro-dollar pair around the NFP (Non-Factor Price). For me, it's important to trade CFDs with a broker that actually has reasonably low average spreads and is fair about how much its spreads can deviate from the average.
How do I find an account to trade CFDs, step by step?
I don't believe there's a universally applicable approach to figuring out which account works best for you. Personally, I try to systematize my approach in a way similar to this:
- Understand the available account types.
- Evaluate minimum deposits: depending on how much you plan to deposit, you might rule out some types at this stage.
- Calculate and compare the theoretical average operating costs per instrument.
- Calculate and compare the actual average operating costs per instrument based on observation of the MT5 market or equivalent and my own operations, and add them together.
- Decide based primarily on point 4 from among the remaining options.
- Repeat this process periodically, especially when there is a significant change in spreads, commissions, or account types.
I think it's helpful to think carefully about your accounts without becoming overly obsessive about them. For most traders, the specific account type doesn't significantly impact profitability in most circumstances. If you're a scalper, this process is more important, whereas if you're a position trader, it usually doesn't matter much. Ultimately, any legitimate way to reduce trading costs means you either make more money or lose less, even if it's just a little.
Frequently asked questions about choosing an account for CFD trading
Why do some brokers offer so many different types of accounts?
The short answer, in my opinion, is that's what traders want. Some prefer spreads, others commissions, and still others a combination of both. This can be due to practicality and ease of calculation for scalpers, cultural preferences in some countries, or demographics that favor commissions, among other reasons. That's just how it is, and brokers generally want to give their clients what they ask for whenever possible.
How do I find out which account is right for me to trade CFDs?
I don't believe there's a one-size-fits-all solution, but I personally like to compare the average real-world operating costs across different account types. I conduct as thorough a test as reasonably possible, but without losing sleep over it, as I described earlier in the article. I usually find a fairly clear winner and choose that option, but it's possible that two or even three account types might be nearly equally good; in that case, it all comes down to personal preference.
If I'm a scalper on a spread-based account and I notice that my trades often don't move significantly out of the spread, does that mean I should switch to a commission-based account?
The short answer is "no," but I think this line of research should be your priority. I think you should test this theory as realistically as possible and see what the actual results are. You'll likely find that a fee-based account would be cheaper, but, as noted in the main article, there are some caveats.
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