Costs, Spreads & FeesSpread MarkupBroker Margin
Markup
The amount a broker adds to a wholesale price or rate before showing it to the client, forming part of its revenue.
What Markup means
Markup is the difference between the price a broker obtains and the price it shows. On spreads it means adding a fixed number of points to the best bid and offer received from liquidity providers, so a raw quote of 0.2 pips is presented as 1.2 pips with a one pip markup. The same principle is applied to swap rates, where a margin is subtracted from the credit side and added to the debit side, and to currency conversion, where a percentage is applied to the exchange rate used.
Markup is not improper in itself; it is simply how a broker that advertises commission-free trading is paid, and it is the direct alternative to an explicit commission. What matters is disclosure and total cost. A one pip markup on a standard lot is USD 10 per trade, which is comparable to a typical round turn commission, so the two models are often close in aggregate. Problems arise only when markup is applied on top of a commission that was presented as the sole charge, or when swap markups are large enough to make both sides of a pair negative without explanation.
Because markup is embedded in a price rather than itemised on a statement, comparing brokers requires measuring realised all-in cost rather than reading advertised components. Recording actual fill prices against an independent reference feed over a period, and comparing quoted swap rates against the underlying interest rate differential implied by short-term money markets, are the standard ways to estimate how much markup an account is really paying. The exercise is worth doing periodically rather than once, since markups are a commercial setting that a broker can change per instrument, per account tier or per session without any change to the published fee schedule.
Worked example
If the interbank quote on EUR/USD is 0.2 pips and the client sees 1.2 pips, the one pip markup is worth about USD 10 per standard lot round trip, similar in scale to a typical raw-account commission.
Related terms
- Raw SpreadThe underlying market spread passed to the client without broker markup, normally paired with a commission.
- SpreadThe difference between the bid and the ask price, and the most common way a forex broker is paid.
- SwapThe interest credited or debited for holding a forex position overnight, based on the two currencies' rate differential.
- CommissionAn explicit per-trade or per-lot fee charged by the broker in addition to, or instead of, a marked-up spread.
- Currency Conversion FeeA charge applied when converting between the account's base currency and the currency of a trade or transfer.
Frequently asked questions
What does Markup mean in forex trading?
The amount a broker adds to a wholesale price or rate before showing it to the client, forming part of its revenue.
How does Markup work in practice?
Markup is not improper in itself; it is simply how a broker that advertises commission-free trading is paid, and it is the direct alternative to an explicit commission. What matters is disclosure and total cost. A one pip markup on a standard lot is USD 10 per trade, which is comparable to a typical round turn commission, so the two models are often close in aggregate. Problems arise only when markup is applied on top of a commission that was presented as the sole charge, or when swap markups are large enough to make both sides of a pair negative without explanation.
What is an example of Markup?
If the interbank quote on EUR/USD is 0.2 pips and the client sees 1.2 pips, the one pip markup is worth about USD 10 per standard lot round trip, similar in scale to a typical raw-account commission.
Trade with a regulated broker
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