The Cost of a Trade: Unpacking Institutional vs. Retail Trading Expenses Every participant in the forex market, from a bedroom trader to a Wall Street giant, incurs costs to execute a trade. However, the structure and scale of these trading costs differ dramatically between institutional traders and retail traders. While it might seem that institutions always get a better deal, the reality is more nuanced. Understanding these differences reveals much about the market's structure and the true price of market access for different players. The Spread: Raw Feeds vs. Retail Markups The most visible trading cost is the bid-ask spread. This is where the difference is most stark. Institutional Traders: Through prime brokerage relationships, institutions get direct access to the interbank market. They see...
