A tighter spread is not a lower cost
Advertising compares spread against spread, which is structurally incomplete: an ECN account moves part of the cost out of the spread into a visible commission, so it looks cheaper without necessarily being so.
The correct comparison adds both at your actual size, plus swap if you hold positions. The answer varies by style: a scalper benefits from the tighter spread because trade count is high and range is small, while someone holding for days may not notice the difference at all. See execution cost.
The same cost, distributed two ways
Your broker's execution model determines who stands on the other side of your trade and how your price is formed. It is a cost line rather than a contractual detail: the two common models distribute the same cost differently — one inside the spread, the other split between a tighter spread and an explicit commission.
The correct comparison is total cost on the reference account — 0.10 lots of gold — not either component alone, because comparing spreads in isolation favours whichever model hides its cost.
A worked example
On 0.10 lots of gold, a full comparison rather than a spread comparison:
- Standard account — a 30-cent spread with no commission = $3.00.
- ECN account — a 12-cent spread = $1.20, plus $0.70 commission per side = $1.40. Total $2.60.
A 40-cent per-trade advantage to ECN. Across ten trades a week that is $4; across a hundred a month, $40 — a figure that matters to a scalper and is nearly irrelevant to someone taking five trades a month. The rule: compute it at your own frequency, not the advertised example.
Common mistakes with this term
- Comparing accounts by spread alone, when commission relocates the cost rather than removing it.
- Assuming ECN means no slippage, when slippage comes from market depth rather than the model.