How to cost a forex trade in full

If you do not know exactly what a trade costs you, you cannot know whether your strategy makes
money. Here is the full calculation — work it out once and reuse it.

The formula

Total cost = spread + commission + swap + a slippage allowance − rebate

The first four are money out, the last is money in. Taking them in turn.

1. Spread

Spread cost = spread in pips ×
pip value × number of lots.

Pip value on one standard lot: pairs quoted
against the dollar (EUR/USD, GBP/USD) are $10. On JPY pairs a
pip is 0.01 and the value depends on the rate, usually around $6–7.
Gold: one lot is 100 ounces, so every $0.01 of
price is $1.

2. Commission

Only on ECN and Raw accounts. Convert to round turn: if the broker quotes “$3 per
side”, the number you want is $6 per lot.

3. Swap

Only if the position is held overnight. Take the instrument’s swap rate from the
contract specification, multiply by the number of
nights, and multiply Wednesday by three. Intraday, this is zero.

4. A slippage allowance

You cannot know it in advance, but leaving it out means you always underestimate. The practical
approach: take your last 50 trades, work out the average gap between the price you asked for and the
price you got, and use that.

5. The rebate

Subtract rate per lot × number of lots. Use the rate for the account type you
actually trade, not the headline number at the top of the table.

A worked example

2 lots of EUR/USD on a Raw account: 0.2-pip spread, $6 per lot commission, held one night at −$7
per lot, rebate $5.50 per lot:

• Spread: 0.2 × 10 × 2 = $4
• Commission: 6 × 2 = $12
• Swap: 7 × 2 = $14
• Gross: $30
• Rebate: 5.50 × 2 = −$11
• Net cost: $19

Which means price has to move nearly a full pip your way before you break even. That figure
belongs in your plan before you enter, not after you close.

The one-off job worth doing

Build a small spreadsheet with columns for instrument, lots, spread, commission, nights and
rebate rate. Fill it in once and every trade afterwards takes ten seconds to cost. It is the
simplest tool here and the one that changes how you pick trades the most.

This article is for information only and is not investment advice. Conditions and fee levels are published by the brokers and can change at any time — check with the broker you actually use. Leveraged forex and CFD trading carries a high level of risk and can cost you your entire deposit.