Many traders calculate profit and loss from the price movement alone, then find the numbers do not add up. The reason is that every trade carries three costs — and some strategies lose because of them alone, even when the analysis was right.
1. The spread
The gap between the buy price (Ask) and the sell price (Bid). When you open a trade you open it at a loss equal to the spread immediately — price has to move in your favour by the size of the spread before you break even.
Where to see it: in MetaTrader, Market Watch → right click → Spread adds a column that shows it live.
What matters: the spread is not fixed. It widens around news, at session open and close, and on low-liquidity pairs.
2. The commission
A fixed amount per lot, charged on opening and on closing. Not every account has one:
- Standard accounts: usually no commission, but a wider spread (the cost is baked into it).
- ECN / Raw accounts: a very tight spread plus an explicit commission.
Neither type is "cheaper" in absolute terms — it depends on your style. For scalping, ECN is usually cheaper; for long trades the difference matters less.
3. The swap — the cost of holding overnight
If your trade stays open past the daily rollover time (usually midnight server time), a swap is charged — an overnight financing fee. It can be negative (you pay) or positive (you receive), depending on the pair and the direction of your trade.
A point that surprises people: on one particular day of the week the swap is charged three times — to cover the weekend. At most brokers that is Wednesday for currency pairs, but it varies by instrument and broker.
Where to see it: Market Watch → right click the symbol → Specification → Swap Long and Swap Short.
If you trade short trades that open and close the same day, swap does not concern you. If you hold trades for weeks, it becomes a number that matters.
The full calculation for one trade
Why these costs kill some strategies
Take a scalping strategy targeting 5 pips per trade:
- Spread: 2 pips → 40% of the target is gone before you start.
- Commission: equal to half a pip → another 10%.
So half the expected profit went to costs. The strategy needs a very high win rate to stay profitable — and that is hard.
By contrast, a strategy targeting 200 pips: the same spread takes only 1%. That is why longer-term strategies are far less sensitive to costs.
What to do in practice
- Know your costs as numbers before you judge a strategy. Open Specification for every symbol you trade.
- Compare the full cost between accounts, not the spread alone. (A tight spread plus a high commission can be more expensive than a wider spread with no commission.)
- Count the costs into your demo results. Some demo accounts have a tighter spread than reality, so the result looks better than it is.
- Avoid opening trades around news if your strategy is sensitive to the spread.
Costs are not a detail — they are the difference between a strategy that wins on paper and loses in reality. Count them from day one.