What a trade costs

Every instrument has not one price but two. Bid is the price at which you can sell, and Ask is the price at which you can buy. Ask is always slightly higher than Bid.

Spread — the difference between them. It is the broker’s fee built into the price itself.

What this means in practice. When you open a buy trade, it immediately shows a small loss: you bought at Ask, but positions are valued at Bid. This is not a terminal error — it’s the spread. To get back to zero, the price has to move in your favor by at least the size of the spread.

On some account types, the broker charges a separate commission based on volume — usually a fixed amount per lot, charged separately when opening and when closing.

It usually works like this: either the spread is wider and there is no commission, or the spread is narrower but there is a commission. Which is better depends on how you trade; compare total costs, not a single line item.

If a position stays open past a certain time of day, a swap is applied. It can be either a charge or a credit, depending on the instrument and the direction of the trade.

For intraday trades, swaps don’t matter. But if a position is held for weeks, the accumulated swaps add up to a noticeable amount.

Note: the word “swap” in a list of derivatives means something completely different — an agreement to exchange cash flows. Here we mean only the fee for holding a position overnight.

Slippage — the difference between the price you saw and the price at which the trade was actually executed.

Some time passes between clicking the button and execution, and in a fast market the price can change in that time. Slippage can work in your favor or against you, but people tend to notice the latter.

• It is strongest during news releases and at the market open.
• It also affects Stop Loss: during a sharp move, the stop may be executed at a worse price than set.
• That is exactly why a Stop Loss limits your loss but does not guarantee the exact amount you lose.

Example. You bought and then closed a position after the price moved 12 points in your favor. With a 2-point spread and a commission equal to another 2 points, you will end up with about 8 points, not 12.

Over time, this is what makes the difference between “roughly zero” and “a steady loss.” The more often you trade, the more costs affect the bottom line.

• Infrequent trades — costs are barely noticeable.
• Frequent trades — costs become your main expense.

1. Check the current spread in the terminal for the instrument you trade.
2. Check your account terms to see whether there is a commission and a swap.
3. Factor in costs when evaluating results: the price difference is not the final result.
4. Don’t calculate risk right up to the limit — leave a buffer.
5. Don’t trade more often than your approach requires: every trade costs money.

• There isn’t just one price: Bid is for selling, Ask is for buying, and the difference between them is the spread.
• Right after opening, a position shows a small loss — that’s the spread, not an error.
• Commissions and swaps depend on the account type; the current values are in your account terms.
• Slippage is the difference between the expected and the actual execution price.
• A Stop Loss limits your loss but does not guarantee the exact amount.