Every trade costs money before the price moves. The main costs are the spread, commission and, if you hold overnight, swap.
The spread
The spread is the gap between the buy (ask) and sell (bid) price. You pay it on every trade. On most major currency pairs it's quoted in pips. For EUR/USD, 1 pip is 0.0001.
For pairs quoted in US dollars, like EUR/USD, 1 pip on 1 standard lot (100 000 units) is worth US$10. On a mini lot (0.1) it's US$1, and on a micro lot (0.01) it's US$0.10.
Spread cost = spread in pips × pip value × lots.
Commission
Some accounts (often called raw or ECN) charge a commission on top of a smaller spread. Brokers quote it either per side (charged when you open and again when you close) or per round turn (open and close together). Check which one before comparing.
Worked example (illustrative numbers)
- Account A: 1.2 pip spread, no commission. 1 lot of EUR/USD costs 1.2 × US$10 = US$12.
- Account B: 0.2 pip spread plus US$3.50 per side. 1 lot costs 0.2 × US$10 = US$2, plus US$7 commission = US$9.
- At 20 lots a month, A costs US$240 and B costs US$180.
These are example numbers, not any broker's prices. Spreads widen at news times, at market open and in thin markets, so 'from' or 'as low as' spreads may not be what you pay.
Other costs to check
- Swap or overnight financing, charged or paid when you hold a position past the daily cut-off.
- Deposit, withdrawal and currency conversion fees, for example if your account is in US dollars and you fund it in rand.
- Inactivity fees on dormant accounts.
Our calculator works this out for your own lot size and trades per month.
General information, not advice. Brokrpedia is not an FSP. CFDs are leveraged and most retail traders lose money.