A markup refers to the additional cost that brokers or introducing brokers (IBs) add on top of the standard spread and commissions. Since this markup is factored into the spread displayed on the trading screen, it becomes an “invisible cost” that traders often fail to notice. Some cashback services use accounts with markups to secure the funds for rebates; in such cases, even if you receive a rebate, your actual costs do not decrease.
Key Points of This Article
- The markup is added to the spread and commission, making it difficult to distinguish at a glance.
- The more trades you make, the greater the cumulative cost—which is particularly disadvantageous for scalping and EA trading.
- You can verify this for yourself by comparing it to the standard terms offered by the same broker.
- REBATE ONE does not apply any markup whatsoever.
How Markup Works: A Numerical Overview
The spread is the difference between the ask price and the bid price, and it is an inherent trading cost. A markup refers to the additional amount added on top of that.
| Conditions | Spread | Difference |
|---|---|---|
| Standard Account (No Markup) | 1.0 pips | — |
| Markup Account | 1.5 pips | +0.5 pips (add-on) |
This 0.5 pips will continue to be charged on every trade. If you trade 10 times a day, that amounts to 5 pips; if you trade 200 times a month, that amounts to 100 pips—costs that add up without you even realizing it.
The Impact of Markup on Traders
- Constant increase in transaction costs: Since a surcharge is applied to every transaction, profits are small and losses are large.
- The Shorter the Trading Horizon, the More Disadvantageous It Is: Scalping, day trading, and EAs (automated trading) involve a high number of trades, and the cumulative effect of these additional costs directly erodes profits.
- The cashback benefit is offset: Even if the cashback amount appears to be substantial, once the markup is deducted, the actual cashback may be minimal—or even negative.
How to Identify Markup
You can check whether there are any markups in your account by following these steps.
- Check the standard spreads listed on the official website for the same broker and account type.
- Record the spread for the same stock at the same time in your own account (comparing it with your demo account is also useful)
- If the discrepancy persists, check with the IB or service linked to your account to see if there are any additional charges.
When choosing a cashback service, make sure to check whether it explicitly states "no markup" and whether the terms for earning cashback are clearly disclosed.
REBATE ONE does not apply any markup.
REBATE ONE’s rebate funds come from referral commissions (advertising fees) paid by brokers. Since these funds are not added to traders’ spreads or commissions, you can receive cashback on each trade while maintaining the same trading conditions as a standard account.
FAQ
What is the difference between a spread and a markup?
The spread is the difference between the bid and ask prices and represents a necessary trading cost. A markup refers to the additional amount added on top of that spread and any commissions.
Isn't markup illegal?
This is a common practice in the compensation structures of brokers and IBs, and it is not necessarily illegal. However, if these fees are added without being explicitly disclosed to traders, it becomes difficult to compare actual costs; therefore, it is important to choose a service that offers a high degree of transparency.
Is it still worth it to use a markup account if there's a cashback offer?
It depends on the difference between the markup and the rebate amount. If the markup exceeds the rebate, you’ll end up losing money. The safest bet is to choose a service that offers a rebate without any markup.
Summary
Markup is an additional cost hidden within the quoted spread, and its impact is greater for traders who execute a high volume of trades. You can verify this by comparing it to standard terms. If you use a cashback service, be sure to choose one that explicitly states it has no markup and allows you to check your transaction history. REBATE ONE does not apply any markups whatsoever, and after registering for free, you can check your rebate history at any time on your My Page.
