Spreads, Commissions and the True Cost of Every Trade

Layer one: the spread

The spread is the difference between the price at which you can buy and the price at which you can sell at the same instant. You pay it on entry and you carry it as an immediate unrealised loss the moment a position opens.

Advertised spreads are typically the tightest available under ideal conditions. What matters for a real cost model is the typical spread during the hours you actually trade, and the widening behaviour around scheduled announcements.

Layer two: commission

Some account types replace part of the spread with an explicit per-lot commission. Neither model is inherently cheaper; the total of spread plus commission is what counts. A raw-spread account with commission often wins for high-frequency activity and loses for occasional larger positions.

Compare like with like by converting everything to a single figure: total cost per standard lot round turn, in account currency.

• ◆Spread cost per lot = spread in pips × pip value
• ◆Commission = charged per side or per round turn — confirm which
• ◆Total round-turn cost is the only comparable number across platforms

Layer three: overnight financing

Positions held past the daily rollover incur a financing charge or credit reflecting the interest rate differential between the two currencies, plus the venue's own markup. For short-term traders this is negligible; for anyone holding positions for weeks it can exceed all other costs combined.

Financing rates change and are usually published in a swap table. A platform that publishes current rates clearly and updates them is easier to model than one that buries them.

Layer four: slippage and execution quality

Slippage is the difference between the price you expected and the price you received. It is not always negative, but on stop orders in volatile conditions it is negative more often than not, and it is a real cost even though it never appears on a fee schedule.

Measure it yourself. Record intended and actual fill prices for fifty trades and the resulting average is more informative than any published execution statistic.

Layer five: account-level charges

Inactivity fees, withdrawal charges, currency conversion on deposits and account maintenance costs sit outside the trade itself and are frequently overlooked. For a small or dormant account these can be the largest single cost.

When we examine a platform, including NordicFX at nordic-fx.com, we look for a single page where every charge is listed rather than costs scattered across several documents. Consolidated disclosure is a meaningful quality signal.

Key takeaways

• ✓Compare total round-turn cost per lot, not headline spreads
• ✓Overnight financing dominates for multi-week holding periods
• ✓Slippage is a real cost that never appears on a fee schedule
• ✓Account-level charges can outweigh trading costs on small accounts