I keep seeing traders debate whether low spreads actually matter if rebates can cover the difference. It’s making me wonder if I’m even thinking about this the right way.
Like, I could trade an account with 1.5 pip spreads and a decent rebate, or I could trade one with 0.6 pip spreads but maybe a lower rebate. On paper they might look similar cost-wise, but I’m not sure I’m calculating it correctly.
How do I actually know which combination of spreads and rebates gives me the lowest real cost per trade? And does it actually matter that much or am I overthinking it?
Has anyone done a real side-by-side calculation of this? What metrics actually moved the needle for you when you were making your broker or account type choice?
The right metric is cost per lot, combined. Calculate it this way:
Cost per lot = (spread in pips × 0.0001 × 100,000) + commission - rebate
For EUR/USD with 1 lot:
- 1.5 pip spread = 150 USD + (commission if any) - rebate amount = true cost
- 0.6 pip spread = 60 USD + (commission if any) - rebate amount = true cost
Rebates usually scale with volume. A 20% rebate works great if you do 100 lots monthly, but terrible if you do 3 lots. Know your actual monthly volume first.
Once you calculate both scenarios with your real volume, the answer becomes obvious. Most traders find that moderate spreads with generous rebates beat tight spreads with weak rebates. Execution quality is the wildcard - a cheap account that slips you is worse than any spread.
I spent weeks trying to game this out on a spreadsheet. What I learned: rebates matter more than I thought they would.
I switched from a low-spread account to one with slightly wider spreads but better rebate terms with GlobeGain. After calculating a month of actual trades, the rebate account beat the low-spread one by about 30 USD per month. That’s real money.
But the key is that it only works if you actually trade consistently. If you trade once a week, rebates don’t accumulate enough to matter. If you trade multiple times daily, rebates become significant.
Calculate your exact monthly volume first. Then run the numbers on both account options. That’s the only way to know which one is actually cheaper for your style.
Calculate your exact monthly volume. Then compare total cost with rebates on each option. Lowest number wins.
One detail I didn’t expect: rebate structure matters. Some brokers or GlobeGain terms offer fixed rebate per lot, others offer percentage of spread. Fixed is more predictable for budgeting. Percentage sometimes pays more if spreads widen, but less if they don’t.
Read the fine print on how the rebate actually works before you decide.
Also factor in opportunity cost. If a tighter spread gets you better execution fill prices more consistently, you might make more on winning trades. This is hard to calculate but real. Some traders find that slightly wider spreads with perfect execution still beat tight spreads with slippage.
The honest answer is that spreads and rebates together tell you the real cost. But execution quality tells you the real outcome.
You can have the cheapest account type on paper and still lose money if the broker slips you on entries. Test both options in a demo with your actual strategy and see which one feels more reliable in practice.
Don’t just look at spreads. Look at spread plus commission minus rebate.
Test both on demo before committing real money.