Module 2: Your real trading costs · Lesson 8 of 11
Adding it all up: cost per trade and per month
3 min read
Your true trading cost is the spread plus commission plus any swap, worked out per lot and then multiplied by how many lots you trade. Doing this sum once can be eye-opening, because small costs per trade become large over a month.
Step 1: cost per lot
Use one standard lot of EUR/USD, where one pip is about $10.
Example: These figures are illustrative. You trade on a raw account with an average spread of 0.4 pips and $7 round-turn commission, and you close all trades the same day, so there is no swap. Spread cost is 0.4 × $10 = $4, commission is $7 and swap is $0, giving a total of $11 per lot.
Step 2: cost per month
Now multiply by your volume. "Lots per month" means the total size of all your trades added together, counting each round trip once.
| Monthly volume | Cost per lot | Monthly cost |
|---|---|---|
| 5 lots | $11 | $55 |
| 20 lots | $11 | $220 |
| 50 lots | $11 | $550 |
| 100 lots | $11 | $1,100 |
An active trader at 50 lots a month would pay $550 in costs, or $6,600 over a year, before making a single winning trade.
Step 3: compare against your account
Express the monthly cost as a percentage of your account to see how hard your strategy has to work.
Example: With a $10,000 account and 20 lots a month, costs of $220 equal 2.2% of the account each month. Your trades need to earn more than that just to stay level.
Ways to reduce costs
- Choose an account type that matches your style, using the comparison method from earlier lessons.
- Avoid trading when spreads are widest, such as around major news or in quiet hours.
- Check swap rates before holding trades overnight.
- Trade less often if many of your trades add little value.
- Consider a rebate service, which returns part of the commission your broker pays to the introducer. The next module explains this.
Risk: Lower costs help, but they cannot rescue a strategy that loses money on its trades. Treat cost control as one part of a sound plan.
Key takeaways
- Total cost per lot is spread plus commission plus swap.
- Multiply by lots per month to see your monthly cost.
- Comparing monthly costs with your account size shows the hurdle your trading must clear.
- Matching your account type and trading times to your style can lower costs.
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