Does your strategy survive the costs?

Spread, commission and swap are the strategy killers nobody models. A system that wins 60% of the time with 5-pip targets can be deeply negative after costs, while the raw backtest looks great.

Does your strategy survive the costs? — bid-ask spread diagram
The bid-ask spread on a currency pair

How do you account for costs?

  • the cost assumptions in your testing
  • how costs changed a strategy you liked
  • the pair or time frame where costs dominate
Does your strategy survive the costs? — pip movement diagram
How a pip moves the exchange rate

The trading costs guide gives the real cost model.

Background: The real cost of a forex trade: spread, commission and swap

Every trade has costs, and they are easy to underestimate. Here is how to add up the spread, commission and overnight swap on a position.

What is a spread in forex?

The difference between the bid (sell) and ask (buy) price. You pay it every time you open a trade, and it widens when the market is less liquid.

Is a raw spread account cheaper?

Not automatically. Add the spread and the round-trip commission together and compare the total with a spread-only account's typical spread on the pairs you trade.

Read the full guide

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