Key Takeaways
- There are four main trading costs. The spread on every trade, commission on raw spread accounts, swap on positions held overnight, and slippage when price moves before your order fills.
- Costs hit traders differently. In our examples, a scalper paid $1,100 to $1,600 a month mostly in spread and commission, while a swing trader’s biggest cost was swap.
- Small targets lose the most to costs. A 1.2 pip spread takes 24% of a 5 pip target but only 1.2% of a 100 pip target.
- Check and test your real costs. Use the symbol Specification and History tab in MT4 or MT5, match the account to your style, and backtest with realistic spread, commission and swap.
Trading costs are what you pay every time you trade, win or lose. In forex and CFD trading there are four main ones: the spread (the gap between the buy and sell price), commission (a fee per lot on some accounts), swap (an overnight charge or credit for holding positions) and slippage (the difference between the price you expected and the price you got).
Each one looks small on a single trade. Together, over hundreds of trades, they can decide whether a strategy makes money at all. This guide explains each cost in plain language, with examples in dollars, shows how they add up for different trading styles, and covers how to check and reduce them in MT4 and MT5.
The Four Trading Costs at a Glance
| Cost | What it is | When you pay it | Who it hurts most |
|---|---|---|---|
| Spread | The difference between the Ask (buy) price and the Bid (sell) price | On every trade, as soon as it opens | Scalpers and frequent traders |
| Commission | A fixed fee per lot traded | On raw or ECN style accounts, when you open and close | Frequent traders with larger lots |
| Swap | Interest charged or paid for holding a position overnight | Each night a position stays open | Swing and position traders |
| Slippage | Getting filled at a different price than expected | During fast markets, news and thin liquidity | News traders and anyone using stop losses in volatile markets |
Spread: The Cost on Every Trade
Every price on your chart actually has two parts. The Bid is the price you can sell at, and the Ask is the price you can buy at. The Ask is always a little higher. The gap between them is the spread, and it is the broker’s main way of earning from standard accounts.
Because you buy at the higher price and sell at the lower one, every trade starts slightly negative. If EUR/USD shows 1.08500 Bid and 1.08512 Ask, the spread is 1.2 pips, and a new buy trade starts 1.2 pips in loss.
How much does the spread cost?
On EUR/USD, one standard lot (100,000 units) is worth about $10 per pip. So:
Spread cost = spread in pips × pip value × lots
| Spread | 0.01 lot | 0.10 lot | 1.00 lot |
|---|---|---|---|
| 0.2 pips | $0.02 | $0.20 | $2 |
| 1.0 pips | $0.10 | $1 | $10 |
| 1.2 pips | $0.12 | $1.20 | $12 |
| 2.0 pips | $0.20 | $2 | $20 |
On gold, the spread is quoted in dollars. With one lot usually equal to 100 ounces, a $0.25 spread costs $25 per lot, or $2.50 on 0.10 lots.
When spreads widen
Most brokers use variable spreads, which change with market conditions. Spreads are usually tightest when the main sessions overlap and liquidity is deep, and widest:
- Around the daily rollover, late in the New York afternoon, when liquidity is thin.
- Around major news, such as central bank decisions and US jobs reports.
- During quiet periods, such as the Asian session for European pairs, and holidays.
- On exotic pairs and smaller markets, which trade less.
A spread that is normally 1 pip can briefly jump to 5 or 10 pips in these moments, which can trigger stop losses even when the chart price never touched them.
Commission: The Fee on Raw Spread Accounts
Many brokers offer two main account types. A standard account has wider spreads and no commission. A raw spread or ECN style account has very tight spreads but charges a commission per lot.
Commission is usually quoted either per side (when you open, and again when you close) or per round turn (open and close together). A broker that charges $3.50 per side charges $7 per round turn. Always check which one a broker means.
Worked example: standard vs raw spread account
Say you trade 1 lot of EUR/USD. The two accounts below use example pricing, so check your own broker’s figures.
| Standard account | Raw spread account | |
|---|---|---|
| Typical spread | 1.2 pips | 0.2 pips |
| Spread cost on 1 lot | $12 | $2 |
| Commission per round turn | $0 | $7 |
| Total cost per trade | $12 | $9 |
In this example, the raw account is cheaper by $3 per lot. Whether it is cheaper for you depends on the real numbers your broker offers and on how often you trade. For a trader placing a few trades a month, the difference is small. For a scalper placing hundreds, it adds up quickly.
Swap: The Cost of Holding Overnight
When you keep a position open past the broker’s daily rollover time, usually 5:00 p.m. New York time, you pay or receive a swap, also called rollover or overnight financing.
The swap comes from the difference in interest rates between the two currencies in a pair, adjusted by the broker. In simple terms, buying a currency with a higher interest rate than the one you sell can earn a small credit, while the opposite usually costs you. Because brokers add their own markup, it is common for both the long and the short swap on a pair to be negative.
The triple swap day
Forex trades settle two business days after the trade date, so a position held over the rollover on one weekday also covers the weekend. To account for that, brokers charge three days of swap on one day of the week. For most currency pairs this is Wednesday, but it can differ by broker and by instrument, such as metals, indices or crypto. MT5 shows the triple swap day in each symbol’s specification.
Worked example: the cost of holding a swing trade
Say you buy 1 lot of a pair with a long swap of −$7 per night, and you hold it from Monday to the following Monday.
| Night | Swap days charged | Cost |
|---|---|---|
| Monday | 1 | $7 |
| Tuesday | 1 | $7 |
| Wednesday (triple swap) | 3 | $21 |
| Thursday | 1 | $7 |
| Friday | 1 | $7 |
| Total for one week | 7 | $49 |
If the trade was aiming for 50 pips, or $500 on 1 lot, the swap takes about 10% of that target. Held for a month, the cost would be about four times higher. Swap matters little for day traders who close before rollover, and a lot for anyone holding positions for weeks.
Some brokers offer swap free accounts, often called Islamic accounts, which do not charge swap but may charge an administration fee instead or apply wider spreads. Hedged positions pay swap on both sides, which our guide to forex hedging explains in more detail.
Slippage: The Hidden Cost of Execution
Slippage is the difference between the price you expected and the price you actually got. It happens because prices move between the moment your order is sent and the moment it is filled, and because there may not be enough volume at your exact price.
- Negative slippage fills you at a worse price.
- Positive slippage fills you at a better price. It can happen too, though traders tend to notice the negative kind more.
When slippage happens
| Situation | Why it causes slippage |
|---|---|
| Major news releases | Price jumps faster than orders can be filled |
| Weekend and session gaps | The market opens at a different price from the close |
| Stop loss orders | Once triggered, a stop becomes a market order and fills at the next available price |
| Thin liquidity | Few orders on the other side, such as late in the US afternoon |
| Large orders | Not enough volume at one price to fill the whole order |
| Slow connection | The longer your order takes to reach the broker, the more price can move |
Worked example: slippage on a stop loss
Say you are long 1 lot of EUR/USD with a stop loss at 1.0820. A strong US data release comes out and price drops fast. Your stop triggers, but the next available price is 1.0815, so you are filled 5 pips lower.
You planned to lose 30 pips, or $300. The slippage added 5 pips, or $50, so the real loss is $350. A stop loss sets where you want to exit, not a guaranteed price.
Limit orders, such as a take profit or a buy limit, do not suffer negative slippage in the same way, because they only fill at your price or better. The trade off is that they may not fill at all.
Putting It Together: What Trading Really Costs
The same costs affect different traders very differently. Here are two traders with the same $10,000 account, using the example pricing from this article.
Worked example 1: a scalper
The scalper places 200 trades a month on EUR/USD at 0.5 lots, closing every trade the same day.
| Cost | Standard account | Raw spread account |
|---|---|---|
| Spread | 200 × 0.5 × $12 = $1,200 | 200 × 0.5 × $2 = $200 |
| Commission | $0 | 200 × 0.5 × $7 = $700 |
| Slippage, averaging 0.2 pips | 200 × 0.5 × $2 = $200 | $200 |
| Swap | $0 | $0 |
| Total for the month | $1,600 | $1,100 |
That is 11% to 16% of the account in a single month. The strategy has to earn that much before it makes any profit at all.
Worked example 2: a swing trader
The swing trader places 8 trades a month at 1 lot, holding each one for about a week, with an average swap of −$5 per swap day and the triple swap included.
| Cost | Standard account |
|---|---|
| Spread | 8 × $12 = $96 |
| Commission | $0 |
| Slippage, averaging 0.2 pips | 8 × $2 = $16 |
| Swap, about 7 swap days per trade | 8 × 7 × $5 = $280 |
| Total for the month | $392 |
For the swing trader, the swap is the largest cost, more than the spread and slippage together. For the scalper, the spread dominates and swap does not matter.
Another way to see costs is to compare them with the size of the move you are aiming for.
| Profit target | Cost of 1.2 pips | Share of the target lost to cost |
|---|---|---|
| 5 pips | 1.2 pips | 24% |
| 10 pips | 1.2 pips | 12% |
| 30 pips | 1.2 pips | 4% |
| 100 pips | 1.2 pips | 1.2% |
The smaller the target, the more of it costs take. This is why scalping strategies are so sensitive to the broker and account type, and why a strategy that works on one broker can lose on another. Our guide to AI gold trading bot scalp strategies shows how even a small spread raises the win rate a gold scalper needs to break even.
How to Check Your Trading Costs in MT4 and MT5
You do not have to guess what you are paying. MetaTrader shows most of it.
- Spread and swap. Right click a symbol in Market Watch and choose Specification. It shows the spread, the swap type, the long and short swap values and, in MT5, the triple swap day. The MetaTrader 4 guide to the contract specification window explains each field.
- Live spread. In Market Watch, right click and turn on the Spread column to see the current spread for every symbol.
- Commission and swap you have paid. The History tab (Account History in MT4) has Commission and Swap columns for every closed trade.
- Slippage. Compare the price you set for a stop loss or pending order with the price in the History tab. Over many trades, the average difference shows your typical slippage.
A useful habit is to export your history once a month and add up spread, commission and swap separately. Many traders are surprised by which one is largest.
How to Reduce Trading Costs
- Match the account to your style. Frequent traders usually save with a raw spread account. Traders who place a few trades a month may find a standard account simpler and no more expensive.
- Trade when spreads are tight. For most major pairs and gold, that means the London and New York sessions, not the rollover hour or holidays.
- Be careful around news. Spreads widen and slippage rises. Pause, reduce size or use limit orders.
- Check swaps before holding. If a position will be open for weeks, compare the long and short swap first, and consider the triple swap day.
- Use limit orders where they fit. Entering and exiting at your price avoids negative slippage, at the risk of not being filled.
- Cut the connection delay. Running your platform on a server close to your broker reduces the time orders take to arrive. Our guide to the best VPS for algorithmic trading compares options.
- Trade less if costs are eating the edge. Fewer, better trades often cost less than many marginal ones.
If you also trade stocks, costs work differently, with commissions per share, dividend adjustments and wider spreads at the open. Our guide to the best stocks to trade on MetaTrader 5 covers those.
Trading Costs and Backtesting
A backtest that ignores costs will always look better than live trading. Before trusting any result, check that it uses a realistic spread, includes commission if your account charges it, and accounts for swap on trades held overnight.
A quick way to test how sensitive a strategy is to costs is to run the same backtest twice, once with your normal spread and once with the spread doubled. If the profit almost disappears, the strategy depends on very cheap trading, and small changes in live conditions could turn it into a loser. Our guide on how to backtest your expert advisor explains how to set spread and costs in the Strategy Tester.
Trading Costs and Trading Bots
Expert Advisors trade more often than most manual traders, so costs matter even more. A bot that opens 20 trades a day pays 20 spreads a day, every day. Before running any EA, check how many trades it places, how long it holds them, and whether its results still hold after realistic spread, commission and swap.
XAUBOT, our own platform, is built with these costs in mind. Scalp bots come with set trading hours that you can adjust, which helps keep them away from the rollover hour when spreads are widest, and paid plans include a news filter that pauses trading around high impact events. You set the stop loss, take profit and risk yourself, so you can size trades with your broker’s real costs in mind.
You can see how the bots work on our forex trading bot and gold trading EA pages. Every bot runs on MetaTrader 4 and MetaTrader 5, and you can test any setup free for 15 days on a demo account with your own broker’s pricing. Our broker guides for IC Markets, RoboForex, Exness and Tickmill explain setup with each one. These are examples, not endorsements.
Trading Costs Questions
Which trading cost is the biggest?
It depends on how you trade. For scalpers and frequent traders, spread and commission usually dominate. For traders who hold positions for weeks, swap can become the largest cost.
Is a zero commission account free?
No. Accounts without commission usually have wider spreads, so the cost is built into the price instead. Compare the total cost per lot, spread plus commission, not just one part.
Why is my swap negative on both buy and sell?
Brokers add a markup to the interest rate difference between the two currencies. When the difference is small, the markup can make both sides negative.
Can slippage be avoided?
Not completely. You can reduce it by trading liquid markets at active times, avoiding market orders around news, using limit orders where they fit and running your platform on a fast connection.
Do trading costs apply on demo accounts?
Demo accounts usually show spreads and swaps, but execution is often smoother than live trading, so slippage is often lower on demo. Expect live costs to be at least slightly higher.
Final Word
Trading costs explained simply: spread on every trade, commission on raw accounts, swap on overnight positions and slippage when markets move fast. None of them is large on one trade, but together they can decide whether a strategy works. Check what you pay in MetaTrader, match your account to your trading style, and always test strategies with realistic costs.
Trading with leverage carries a high risk of loss. Only trade with money you can afford to lose.
