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Spreads, Commissions and Swaps Explained: The Real Cost of Every Trade

Updated October 27, 2026 · By the Pips & Gold team

Every trade costs money before it can make any. The costs are small on each trade, so they are easy to ignore, but for active traders and automated strategies they often decide whether a strategy wins or loses over a year. This guide shows where each cost comes from and how to calculate it.

By Pips & Gold teamLast updated October 21, 20268 min readLevel: All levels

Key takeaways

There are three main costs: the spread (gap between buy and sell price), commission (a fee per lot) and swap (overnight interest).
Standard accounts usually build the cost into a wider spread; RAW or ECN accounts have tight spreads plus a commission.
Swaps are charged or paid on positions held past about 5 p.m. New York time, with three days' worth usually charged on Wednesday for forex.
Spreads widen at rollover, around news and on thin markets, which is when many stops get hit.
Work out costs in dollars per trade and as a share of your average profit. If costs eat most of the edge, the strategy won't survive live trading.

The spread: bid, ask and the gap between them

Every price quote has two sides. The bid is the price at which you can sell. The ask (or offer) is the price at which you can buy. The ask is always higher. The difference is the spread, and it is the broker's or market's charge for immediate trading.

You buy at the ask and sell at the bid. A new trade is immediately in loss by the spread.

For most currency pairs a pip is the fourth decimal place (0.0001), or the second for yen pairs (0.01). Many brokers quote one more digit, a "pipette" or point. Gold is usually quoted to two decimals, and traders talk about its spread in cents or dollars. See what is a pip for a refresher.

Worked example

What the spread costs on EUR/USD

EUR/USD shows bid 1.08500 and ask 1.08512. You buy 0.50 lot.

Spread = 1.08512 − 1.08500 = 0.00012 = 1.2 pips Pip value on 1 standard lot (EUR/USD, USD account) = $10 Pip value on 0.50 lot = $5 Spread cost = 1.2 × $5 = $6.00

Worked example

What the spread costs on gold

XAU/USD shows bid 4,100.10 and ask 4,100.35. You buy 0.10 lot (10 ounces on most brokers).

Spread = 4,100.35 − 4,100.10 = $0.25 per ounce Position = 10 oz Spread cost = $0.25 × 10 = $2.50 On 1.00 lot (100 oz) it would be $25.00

When spreads widen

Spreads are not fixed on most accounts. They usually widen:

At the daily rollover, around 5 p.m. New York time, when liquidity is thin. Spreads on gold and minor pairs can widen many times over for a few minutes.
Around major news such as US jobs or inflation data.
At the Sunday evening open and before holidays.
On exotic pairs and less popular symbols at any time.

Stops can be hit by the spread aloneA buy trade's stop loss is triggered by the bid. If the spread widens from $0.25 to $2.00 on gold at rollover, the bid can drop to your stop even if the chart's mid-price barely moved. Keep stops away from the normal range and avoid opening trades just before rollover.

Commissions and account types

Brokers generally offer two kinds of pricing:

	Standard (or STP) account	RAW / ECN account
Spread	Wider (cost built in)	Very tight, can be near 0
Commission	Usually none	A fixed fee per lot, e.g. $6-$7 per round turn
Good for	Simple pricing, smaller or less frequent trades	Frequent trading, scalping, many EAs

Commission is normally quoted per lot round turn (opening and closing), or per side (charged twice). Always check which. A "$3.50 per side" commission equals $7 per round turn.

Example only. Real spreads move all the time, and commissions vary by broker and account.

Worked example

Comparing the two accounts over a month

An EA trades EUR/USD about 80 round turns a month at 0.30 lot. Standard account: average spread 1.2 pips. RAW account: average spread 0.1 pip plus $7 commission per lot round turn.

Standard: 1.2 pips × $3 per pip (0.30 lot) = $3.60 per trade × 80 trades = $288 a month RAW: 0.1 pip × $3 = $0.30 spread + $7 × 0.30 lot = $2.10 commission = $2.40 per trade × 80 = $192 a month Saving on RAW = $96 a month

For an EA that only makes $200-$300 a month on that size before costs, the account type can be the difference between profit and loss. That's why many gold EAs are best run on a RAW or ECN account.

Swaps: the cost (or credit) of holding overnight

If you keep a position open past the daily rollover, your broker applies a swap (also called rollover or overnight financing). In forex, it reflects the interest-rate difference between the two currencies, plus the broker's markup. In gold, it reflects US dollar interest rates and the cost of financing gold, plus markup. A swap can be a charge (negative) or, less often, a credit (positive).

In MT5 you can see the current swap rates in the symbol's specification. They are usually shown in points per lot per night, and they change over time.

Why Wednesday is triple swap

Spot forex settles two business days after the trade (T+2). A position rolled from Wednesday to Thursday moves its settlement date from Friday to Monday, so it covers the weekend. To account for those two extra days, brokers usually charge three days' swap at Wednesday's rollover. Some brokers apply the triple swap to metals, indices or other symbols on a different day, often Friday, so check your broker's rules.

For forex, the weekend's swap is usually charged on Wednesday night.

Worked example

Swap on a trade held for a week

You buy 0.50 lot of a pair whose long swap is −$8.00 per lot per night. You open on Monday morning and close on Friday morning.

Swap per night on 0.50 lot = −$8.00 × 0.50 = −$4.00 Nights held: Mon, Tue, Wed (×3), Thu = 6 swap-days Total swap = 6 × −$4.00 = −$24.00

Hold that position for 30 days and the swap alone is around −$120, because swap is charged for every calendar day, weekends included (via the triple charge). Long-term trades on gold and high-interest-rate differences can build large swap costs.

Swap-free accountsSome brokers offer swap-free accounts (often called Islamic accounts) for clients who need them. They usually charge a different fee instead, such as an administration charge after a set number of nights. Read the terms.

Other costs people forget

Slippage: the difference between the price you expected and the price you got. It is common on stop orders during fast markets and can be larger than the spread.
Currency conversion: if your account is in CAD and you trade USD-priced gold, profits and losses are converted, sometimes with a markup.
Deposit and withdrawal fees: some payment methods charge fees or use poor exchange rates.
VPS and software: running an EA 24/5 on a virtual private server costs money each month.
Inactivity fees: some brokers charge dormant accounts.

Putting it together: the true cost of a strategy

The useful question isn't "what is the spread?" but "what share of my average winning trade do costs take?" Work it out like this:

Worked example

Cost as a share of the edge

A gold strategy trades 0.10 lot, with average profit per trade before costs of $6.00. Spread averages $0.30 per ounce and the RAW commission is $7 per lot round turn. Average slippage is $0.10 per ounce.

Spread: $0.30 × 10 oz = $3.00 Commission: $7 × 0.10 lot = $0.70 Slippage: $0.10 × 10 oz = $1.00 Total cost per trade = $4.70 Average edge before costs = $6.00 Edge left after costs = $1.30 (costs take 78%)

This strategy is fragile. A small rise in spreads would make it lose money. Strategies that make only a small amount per trade, such as scalpers, are very sensitive to costs. This is exactly why a scalping EA we tested did not pass: on quiet-hour trades, costs used up nearly all of the profit.

Test with realistic costsWhen you backtest, use real tick data with variable spreads, add the commission your account charges, and run a second test with slightly worse costs. If the result collapses, don't trade it live. See how to backtest an EA in MT5.

Going deeper: notes for experienced traders

Measure your effective spread. Export your trade history and compare fill prices with the mid-price at the time. The effective cost often differs from the advertised "from 0.0 pips".
Cost per unit of volatility. A $0.25 spread on gold is small against a $40 daily range but large against a $2 scalping target. Compare costs with ATR for your timeframe.
Swap carry. Positive carry on some pairs can add a little to long-term trades, but carry trades can unwind violently when risk sentiment changes.
Rollover filters. Many EAs (including ours) block new trades for a period around rollover, for example 23:45-01:15 server time, because spreads spike then.
Commission in the tester. Some demo servers don't charge commission. Add it manually in the tester settings (or in your analysis) so results aren't flattered.

Common mistakes

Looking only at the advertised minimum spread. "From 0.0 pips" is the best moment, not the average. Check typical spreads at the times you trade.
Forgetting commission is per lot. A $7 commission on 2 lots is $14 per round turn.
Mixing up per-side and round-turn commission. $3.50 per side is $7 round turn.
Holding through triple-swap night without checking. On some symbols Wednesday's swap is three times the normal amount.
Opening trades just before rollover. Spreads can widen sharply for a few minutes and trigger stops.
Backtesting without commission or with fixed tight spreads. Results look better than live trading will be.

Printable checklist

I know whether my account is Standard or RAW/ECN.
I know my commission and whether it is per side or round turn.
I checked typical spreads at the hours I trade, not just the minimum.
I checked the swap rates (long and short) for my symbols in MT5's Specification.
I know which day my broker charges triple swap for each symbol.
I avoid opening new trades in the minutes around rollover (5 p.m. New York).
I worked out costs as a share of my average trade profit.
My backtests include commission and realistic, variable spreads.

Frequently asked questions

What is a good spread for EUR/USD?

On many accounts, typical spreads are around 0.1-0.3 pip plus commission on RAW accounts, or roughly 1-1.5 pips on standard accounts in busy hours. They widen at rollover and during news.

Is a RAW account always cheaper?

Not always. It is usually cheaper for frequent traders and EAs, but if you trade rarely and small, a standard account's simpler pricing can be similar. Calculate both for your own trading.

Why was I charged three times the swap on Wednesday?

Spot forex settles two business days after the trade. A position held from Wednesday to Thursday rolls its settlement over the weekend, so brokers charge three days of swap at once.

Can swaps be positive?

Yes. If you hold the currency with the higher interest rate, and the broker's markup is small enough, you may receive a small credit. Many swaps are negative on both sides once the markup is included.

Why did my stop get hit when the chart never reached it?

Charts usually show the bid. A sell trade's stop triggers on the ask, which is higher by the spread, and spreads can widen suddenly at rollover or news.

How do costs affect EAs?

A lot. Many EAs make small profits per trade, so spreads, commission and slippage can turn a profitable backtest into a losing live result. Always test with realistic costs.

Risk warning: most EAs lose money in the long runTrading forex and gold with leverage is high risk and you can lose all of your deposit. Most Expert Advisors do not make money over the long term. Every result shown here is a backtest on past prices, not live trading, and past results do not promise future results. Live results will be different because of spreads, commission, slippage and changing markets. This is not financial advice. Test on a demo account first and only trade money you can afford to lose. Full risk disclaimer.

Sources and further reading

This guide is general education, not financial advice. Broker terms differ; always check your own broker's contract specifications.