Forex Trading Costs Explained: Spreads, Commission and Swaps

A trade can show a price profit while delivering a smaller increase in your account balance. To understand the difference, separate the cost estimate made before trading from the figures recorded after execution. This guide follows one EURUSD example through both calculations, showing where spread, commission and swap belong.

The three costs to identify

• Spread: the difference between the bid and ask. A buy normally opens at the ask and closes at the bid, so the spread affects the price result. Start with our guide to forex spreads if those terms are unfamiliar.
• Commission: an explicit charge under the account's pricing schedule. Check whether a quoted amount is per lot, per side, or for the complete opening-and-closing transaction, often called a round trip.
• Swap: an overnight financing debit or credit that may apply when a position passes the applicable rollover time. Long and short positions can have different rates.

A hypothetical 0.10-lot EURUSD estimate

Assume a USD account, a contract size of 100,000 EUR per lot and a position of 0.10 lot. The position represents 10,000 EUR. With one EURUSD pip equal to 0.0001, its pip value is 10,000 × 0.0001 = USD 1.

For this teaching example, assume a constant two-pip spread, no slippage, commission of USD 3.50 per lot per side, and an arbitrary total swap debit of USD 0.40 for the holding period. These assumptions are not DecodeFX's current charges.

• Estimated spread cost: 2 pips × USD 1 = USD 2.00.
• Round-trip commission: USD 3.50 × 0.10 × 2 sides = USD 0.70.
• Assumed swap: −USD 0.40, equivalent to a USD 0.40 cost.
• Total estimated cost: USD 2.00 + USD 0.70 + USD 0.40 = USD 3.10.

With unchanged quotes, buying at the ask and immediately selling at the bid incurs one full spread. Do not multiply the two-pip spread by two simply because the transaction has an opening and a closing side. A changing spread can alter the estimate; see why forex spreads widen.

Reconcile the actual result without counting spread twice

Now suppose the buy actually opens at an ask of 1.10020 and later closes at a bid of 1.10100. The price profit is (1.10100 − 1.10020) × 10,000 = USD 8.00. Those executed prices already reflect the bid–ask difference.

If the recorded commission totals −USD 0.70 and swap totals −USD 0.40, with no other charges, the net result is USD 8.00 − USD 0.70 − USD 0.40 = USD 6.90. Subtracting the estimated USD 2 spread again would count it twice.

In MT5 history, check the executed prices, volume and all relevant opening and closing deals. Reconcile signed commission, swap and any separate fees with the price result. Some commissions appear as separate account entries. Keep deposits and withdrawals outside the trade calculation, and confirm whether a displayed total already includes charges.

Check swap units and execution differences

A swap number may represent points, a currency amount or an annual percentage. Apply the instrument's calculation method, position size and day multiplier; a universal “rate × nights” formula is insufficient. Triple-swap timing is instrument-dependent and is not always Wednesday.

Slippage is the difference between an expected price and the actual execution price. It can improve or worsen the result and is a price effect, not a separate broker fee. Once actual fills are used, its effect is already reflected in price profit or loss.

Practise the reconciliation

Use a demo trade to compare your estimate with its history. Check the applicable account pricing and MT5 contract specifications first, including contract size, swap method and currency conversion where relevant. Demo results do not guarantee live execution conditions.

Frequently asked questions

Does zero commission mean trading is free?

No. A spread and applicable overnight financing can still affect the result.

Can swap reduce the total cost?

Yes. A positive swap is a credit, although other costs and market losses may outweigh it.

Is USD 1 per pip valid for every trade?

No. It applies to this example's pair, contract size, volume and account currency.

Sources: MetaQuotes: profit calculations; symbol and swap properties; execution and account history.

When you are ready to compare trading conditions, review DecodeFX trading accounts and the terms applicable to your location before deciding whether to proceed.

This article is general education, not personal investment advice. Leveraged trading can cause rapid losses.