Forex Trading Costs: Spread, Commission and Swap

Brokers advertise zero fees, tight spreads and free trading — and every one of them is still paid on every trade. Forex costs come in three forms: the spread, the commission and the swap. None of them is large on a single trade, which is exactly why they are easy to ignore and expensive over hundreds of trades. This guide turns each one into money, compares account types fairly, and shows when costs start to eat the edge of a strategy.

Spread: the cost built into the price

Every pair has two prices. The bid is what you can sell at, the ask is what you can buy at, and the gap between them is the spread. Open a buy and close it immediately, and you lose the spread — that is the cost of crossing it.

Spread cost = spread in pips × pip value per lot × lots

EUR/USD quoted 1.08500 / 1.08512 has a spread of 1.2 pips. On one standard lot with a USD account:

• 1.2 × $10 × 1 = $12 per trade

The spread is not a separate line on your statement. It is already in your entry price, which is why a new position opens slightly in the red.

Spreads are not fixed. They widen around major news releases, at the daily rollover, on Monday opens and on thinly traded pairs. An advertised "from 0.6 pips" is the best case, not the average.

Commission: the explicit fee

Raw-spread or ECN accounts quote spreads close to the interbank market and charge a commission instead. It is usually quoted per lot per side — for example $3.50 to open and $3.50 to close, $7 per lot round turn.

Commission = rate per lot round turn × lots

Comparing a standard account with a raw account

The only fair comparison converts both into the same unit — money per lot round turn:

Account	Typical EUR/USD spread	Commission	Total per lot
Standard	1.2 pips ($12)	$0	$12
Raw spread	0.2 pips ($2)	$7	$9

Here the raw account is cheaper by $3 per lot. Dividing the total by the pip value gives the cost in pips — 1.2 pips against 0.9 — which is how far price must move in your favour just to break even. The numbers are illustrative; plug in your own broker's figures, because the answer flips when spreads or commissions change.

Swap: the cost of holding overnight

A position still open at the daily rollover (typically 5 pm New York time) is charged or paid swap, also called rollover or overnight financing. It reflects the interest-rate difference between the two currencies, plus the broker's markup.

• Swap can be negative or positive, and it differs for buys and sells on the same pair.
• It is quoted per lot per night, in money or in points.
• One night a week is charged triple to cover the weekend — Wednesday on most forex pairs, though metals and CFDs can use a different day.

Example: a one-week hold

You open 1 lot on a Monday with a swap of −$6.50 per night and close it the following Monday. It passes five rollovers, one of them Wednesday's triple:

• Swap units = 4 regular + 1 triple (×3) = 7
• Swap = 7 × −$6.50 = −$45.50

For an intraday trader swap is irrelevant. For a position trader it can be the largest cost of all — or, on a positive-carry pair, a small income.

Swap-free accounts exist for traders who cannot pay or receive interest. They usually replace swap with a fixed administration fee after a set number of days, so check the terms rather than assuming holding is free.

Costs as a share of your risk

The same cost weighs very differently depending on your stop distance. With a total cost of 1.2 pips:

Stop loss	Cost as a share of the risk
10 pips	12%
25 pips	4.8%
50 pips	2.4%
100 pips	1.2%

A scalper with 10-pip stops gives up an eighth of every risked dollar before the trade has a chance to work. That is why short-term strategies live or die on spread and commission, while swing traders worry more about swap.

Slippage: the cost nobody quotes

Slippage is the gap between the price you asked for and the price you got. It happens most on market orders during fast moves and gaps, and it can occasionally be in your favour. It is not a fee, but over many trades it behaves like one — another reason to avoid entering in the seconds around high-impact news.

Putting it into your numbers

The profit and loss calculator shows gross P/L from entry to exit; subtract commission and swap to get net. The pip calculator converts a spread in pips into money for any pair and lot size, and the risk/reward calculator shows how much reward you need once costs are taken into account. For the formula behind gross P/L, see how to calculate profit and loss.

Key takeaways

• Spread cost = spread in pips × pip value × lots. It is built into the entry price and widens around news and rollover.
• Commission is an explicit fee per lot, usually charged on both open and close.
• Compare accounts on total cost per lot round turn: spread in money plus commission.
• Swap is charged or paid on positions held past rollover, with one triple night per week.
• The tighter your stop, the larger the share of your risk that costs consume.
• Slippage is not a fee, but it behaves like one on fast markets.

YenPip calculators are estimation tools, not financial advice. Spreads, commissions and swap rates differ by broker, account type and market conditions.