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.
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
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.
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