In prop trading, every pip counts. Whether you're navigating the evaluation phase or managing a live funded account, understanding the real cost of each trade is crucial. While traders often focus on strategy, entries, and risk management, many overlook one of the most persistent performance killers: trading fees.
Two of the most common costs prop traders face are spreads and commissions. At first glance, they might seem minor—but across dozens or hundreds of trades, these costs can quietly eat into your profits and distort your edge.
A spread is the difference between the bid and ask price of an instrument. If EUR/USD is quoted at 1.1000/1.1002, the spread is 2 pips. This means that the moment you enter a trade, you’re already starting 2 pips in the red.
Many prop firms, especially during evaluation phases, offer commission-free accounts with wider spreads. It may feel cleaner or simpler, but the cost is still there—just baked into the price. In this setup, the more frequently you trade, the more you’re likely to give away in hidden costs.
A commission is a fixed fee charged per trade—often per lot traded. Prop firms offering raw spread or ECN-style accounts usually operate this way. You might enjoy a spread close to zero, but you’ll pay a set fee, like $3 per side, totaling $6 per round turn.
This model is more common in the funded stage, where tighter spreads allow for greater control, and transparency around costs becomes more important for high-precision trading.
In a prop firm setting, the rules are tighter and the margin for error is smaller. Whether it’s a daily drawdown, max loss limit, or profit target, every trade matters. That’s why knowing what you’re actually paying per trade is part of responsible risk management.
A spread-heavy account may not work well for scalpers, where 1 or 2 extra pips could erase the edge. On the other hand, traders who take fewer, larger positions may benefit more from a commission-based account with raw pricing.
Passing a prop challenge or staying funded isn’t only about making good calls. It’s about keeping your trading as cost-effective as possible.
Because in prop trading, understanding the difference between spread and commission isn’t a technicality—it’s part of staying in the game.
