Traders who would move broker over a fifth of a pip on a currency pair take whatever silver costs and never look again. Laziness explains none of it.
The habit that stops at the edge of the currency list
Ask a UK retail trader what EUR/USD costs on their account and you tend to get a number, often to one decimal place. Ask the same person that week what silver costs and you get a shrug, or a phrase lifted from the provider’s marketing. The shopping reflex that took retail FX two decades to build has never crossed a tab to the right. Commodities are no fringe corner of that account either. Metals and energy are where people go when currencies turn quiet, and the FCA thought the category important enough to give it its own rung on the leverage ladder. The instruments get traded; the prices attached get accepted.
One instrument did most of the teaching. Every provider quotes EUR/USD in the same unit, against a lot the market inherited rather than something each firm sets for itself. Two figures from two brokers can be laid side by side and read straight off. Comparison became universal because comparison was free.
Then came ordinary economics. Once buyers can rank providers on one visible figure, that figure becomes the battlefield, and the retail FX spread was ground down to fractions until firms had to compete on the commission line instead. That second contest worked only because commission is also quoted in a shared unit. None of that machinery exists on the commodity page.
The multiplier is the number nobody prints beside the price
Skip the units for a second, because they are the shallow half of the problem. A currency lot is a market convention, the same at every firm, which is why a pip figure can travel between two brokers unaccompanied. A commodity contract is whatever the provider decided it should be. How many barrels sit behind one unit of crude, or how many ounces behind one unit of silver, is a term in that firm’s specifications and not necessarily the term in the next firm’s.
That single missing number does all the damage. Three against four carries no information until you know what one is multiplied by, and the multiplier lives on a page you have to go looking for while the spread sits on the page you were already reading.
The units are the easy bit: silver in cents an ounce, crude in cents a barrel, gas in ticks on a dollar figure, copper in cents a pound, and a reader can at least see those are different things.
| Instrument |
FCA retail cap |
Margin on GBP 10,000 of exposure |
How the spread is quoted |
What you need before a second quote means anything |
| EUR/USD |
30:1 |
about GBP 333 |
Pips, against a lot size the market shares |
Nothing, the two numbers line up as printed |
| Gold |
20:1 |
GBP 500 |
Points on a dollar-per-ounce price |
The provider’s ounces behind one unit |
| Silver |
10:1 |
GBP 1,000 |
Cents an ounce, decimal places vary |
Ounces per unit and how many decimals are shown |
| Crude oil |
10:1 |
GBP 1,000 |
Cents a barrel |
Barrels per unit, and which grade is priced |
| Natural gas |
10:1 |
GBP 1,000 |
Ticks on a dollar figure |
Units per contract and the size of one tick |
| Copper |
10:1 |
GBP 1,000 |
Cents a pound |
Pounds per unit, and whose benchmark it follows |
Caps as published by the FCA, with the margin figures worked out from them. The quoting conventions are read off providers’ contract specifications, and any provider may denominate its commodity book however it prefers.
A tighter cap makes the position rarer and leaves the bill alone
The rulebook treats commodities as their own case. Retail leverage is capped at 10:1 on commodities generally, with gold lifted to 20:1 alongside major indices, against 30:1 for the major FX pairs. On identical exposure that is three times the deposit tied up for oil or silver, and it puts two metals on different rungs though they are sold as one idea.
Notice what the cap does not touch. Spread and overnight financing are charged against exposure, while the cap applies to the deposit you post, so the rulebook governs how many positions an account can carry and says nothing about the price of each. A commodity position consumes more of the account, so people take smaller exposure, so the bill on any single trade looks trivial, and trivial bills are the ones nobody shops for. The cap dims the cost without reducing it by a penny.
Not one number in this article is a price anybody paid
Here is the weak point in all of it. Every figure above comes from one of two places. The caps are the regulator’s, and the margin column is arithmetic performed on them. Everything else describes how firms denominate their books, which is documentation rather than observation. No deposit was made and no statement was read to produce any of it.
There is a bind underneath that worth naming rather than hiding. An argument that a market goes unmeasured is exactly the argument you cannot settle by producing measurements, since if they existed the complaint would already be wrong.
What can be done instead is to pay for the observation rather than reprint the brochure, and that is the position taken by The Investors Centre, which opens and funds live accounts with its own money to test UK trading platforms rather than compiling rankings from providers’ published fee schedules. Paying to find out at least sorts the checkable questions from the rest. It still cannot tell you who is cheaper on silver this month, and no amount of assured prose promotes a convention into a measurement.
Convert once and the shopping takes ten minutes
Pick the one commodity you genuinely trade rather than the six you watch. Find the contract specification, where the units behind a lot are written down, take the spread the platform displays, and multiply the two to get the cost of crossing once. Double it for the round trip and put it into sterling. That figure compares against anything, including the currency trade whose price you already know.
Two useful things fall out. The answer arrives about your account rather than about the market, which is the only version you can act on. And it is durable, because multipliers change far less often than quotes do, so the sum survives long enough to be worth doing once. The familiar complaint that advertised spreads are floors rather than averages applies here too, but it sits downstream: you cannot argue about whether a number is representative until you can read it at all.
Competition needs a buyer who can count
Price competition has a precondition that gets skipped. Somebody must be able to tell that one price is lower than another, cheaply, without a spreadsheet. Currency spreads compressed because that person existed in large numbers. Commodity spreads face no such person, so a wide commodity spread is not evidence of anything underhand, it is a market clearing at the level unwatched prices clear at.
You can usually tell which side of the line an instrument sits on by where the firm puts the figure. A price a provider competes on turns up in the material trying to win your business, in large type. A price nobody checks turns up in the contract specifications, on a page you have to go looking for. A rough guide rather than a rule.
There is an awkward inversion here. The instrument most retail traders inspect hardest is the one inspection has already been done to death on, so what separates providers there is measured in slivers. The instruments nobody inspects are where a real difference could survive, because nothing has been pressing on it.
The question that matters comes before any commodity table. If the cost of your next oil or silver position appeared in pounds beside the order as you placed it, would you place it in that size? No comparison page can answer that, because the multiplication needs the units your own provider happened to choose.
…