In short
- The spread is paid on every trade the moment it opens.
- Commissions are usually charged per lot or as a percentage, and often on both opening and closing.
- Leveraged positions held overnight pay (or occasionally earn) a financing charge called a swap.
- Small percentages compound: frequent trading can cost more than the price moves you are trying to catch.
The spread
Every market has a buy price (ask) and a sell price (bid). The gap between them is the spread, and it is a cost you pay immediately. On a forex pair, the spread cost equals the spread in pips multiplied by the pip value.
Example: 1.2-pip spread on 1 standard lot of EUR/USD = 1.2 × $10 × 1 = $12
Spreads widen when markets are quiet, around big news releases and over weekends. Advertised "from" spreads are the tightest you might see, not what you will always get. Our pip value calculator gives the pip value for any pair.
Commission
Some accounts charge a commission on top of a tighter spread. In forex it is usually quoted per standard lot per side, meaning you pay it once when you open and again when you close.
For shares, commission may be a flat fee per trade or a percentage of the trade value. Compare total cost, spread plus commission, rather than either number alone.
Overnight financing (swap)
A leveraged position is effectively funded with borrowed money. If you hold it past the provider's daily cut-off, you pay or receive a financing adjustment, often called a swap or rollover. For forex it reflects the interest rate difference between the two currencies plus the provider's markup; for index and share CFDs it is usually a benchmark rate plus a markup applied to the full position value.
Example: $50,000 position × (5% + 2.5%) ÷ 365 ≈ $10.27 per night, about $308 over 30 days
Many providers charge three days' financing on one night of the week to cover the weekend. For long-term holdings, financing can easily exceed the spread and commission combined.
Currency conversion
If your account is in one currency and you trade something priced in another, profits and losses are converted, often with a percentage fee. Buying US shares from a euro account, for example, can involve a conversion fee on the way in and again on the way out.
Account and withdrawal fees
- Inactivity fees: some providers charge a monthly fee if you do not trade for a set period.
- Withdrawal fees: some charge per withdrawal or for certain payment methods.
- Platform or data fees: advanced tools and live data can cost extra.
Crypto-specific costs
- Trading fees: commonly a percentage of each trade, sometimes lower for "maker" orders that add liquidity than for "taker" orders.
- Network fees: moving coins on a blockchain costs a fee paid to the network, which varies with congestion.
- Spread on "instant buy": simple buy buttons often include a markup that is not labelled as a fee.
The crypto profit calculator includes fees on both sides of a trade.
Adding it all up
A trader who opens and closes one standard lot of EUR/USD ten times a month, with a 1-pip spread and $7 round-trip commission, pays about $170 a month before any overnight charges. If the account is $5,000, that is 3.4% of the balance every month just in costs. Keep a note of what each trade actually cost; it is often the fastest way to improve results.
Fixed, variable and live forex spreads
Some brokers quote a fixed FX spread; most quote a variable one that widens when markets are thin, such as around the daily rollover or major news. A live forex spread shown on a platform at a quiet moment can be several times wider at 17:00 New York time. When comparing costs, look at typical spreads across the day, not the best one advertised.
Frequently asked questions
What is the biggest trading cost?
For frequent short-term traders, spreads and commissions usually dominate. For anyone holding leveraged positions for weeks, overnight financing is often the largest cost.
Are zero-commission brokers free?
No. Providers that advertise zero commission are usually paid through wider spreads, financing charges or other fees. Compare the total cost of a typical trade.
Why did my trade start at a loss?
Because you buy at the ask and could only sell at the bid. The spread is paid immediately, so every new position begins slightly negative.