Trading costs
Spread, commission, swap and slippage, and how to add them into the cost of one trade.
Start the chapter7 lessons · 4 terms · 4 tools
Lessons
- 01How does commission per lot work in forex?Commission is a fixed fee per lot that raw and zero spread accounts charge on top of a thin spread. Brokers quote it per side, for opening or for closing, or per round turn, for both. To compare it with a spread, divide it by the pip value: $7 per lot on EUR/USD is 0.7 pip.
- 02What is swap in forex, and why is Wednesday triple?Swap, or rollover, is the interest you pay or earn for holding a forex position past 17:00 New York time. It comes from the gap between the two currencies' interest rates, plus the broker's markup. Most forex pairs charge three nights on Wednesday to cover the weekend.
- 03What is slippage in forex trading?Slippage is the difference between the price you expected and the price your order filled at. It happens when the market moves between your click and the execution, most often around news, the daily rollover and the weekly open. Market and stop orders can slip; limit orders fill at your price or better, but may not fill.
- 04Standard vs Raw spread account: which costs less?A standard account charges everything through a wider spread. A raw or zero account shows a spread close to the market's own and adds a commission per lot. Neither is cheaper by default. Convert both to dollars per lot on your symbol, subtract any rebate, and the cheaper one becomes clear.
- 05How much does one forex trade cost?The cost of one forex trade is the spread plus any commission plus any swap, each turned into money for your volume. Slippage can add to it and a rebate takes part of it back. A 0.5 lot EUR/USD trade at a 0.8 pip spread with no commission costs $4.00 before swap.
- 06How do you compare trading costs between brokers fairly?To compare brokers fairly, use the same symbol, the same time window and the typical (median) spread, not the advertised minimum. Add commission, turn everything into dollars per lot, and include swap if you hold overnight. Then subtract any rebate to see the net cost you actually pay.
- 07Trading costs cheat sheet.Every forex trade pays some mix of spread, commission and swap, and can lose a little more to slippage. A rebate gives part of it back. This page puts the formulas, a table of measured spreads and one worked example in one place, with a link to the full lesson on each cost.