Forex spreads and commissions: compare the total cost
A practical example shows how spreads, commissions and holding charges change the cost of a forex trade.
A tight spread is useful information, but it is only one part of the price of trading. Two accounts can advertise different pricing structures and still have similar overall costs. Compare the same instrument, position size and holding period before choosing between them.
Start with the spread
The spread is the difference between the available bid and ask. If the bid is 1.10000 and the ask is 1.10010, the difference is 0.00010, commonly one pip for a pair quoted this way. Other instruments use different tick and pip conventions. Confirm the specification instead of applying this example to every symbol.
Add commissions in the same units
Suppose a hypothetical position has a pip value of $10. A one-pip spread represents about $10 of price difference at entry, before market changes. If another account offers a 0.3-pip spread and charges $7 for opening and closing that position, the simple comparison is $3 plus $7. Both examples total $10 under these assumptions. These are arithmetic examples, not current broker quotes.
Check whether the published commission is per side or round trip. Also check the contract size and account currency. A commission that looks small can become difficult to compare when one page quotes per lot and another quotes per million units.
Include the costs that depend on your behaviour
- Review overnight financing for the instrument and account type.
- Check currency conversion when the account and instrument currencies differ.
- Read deposit, withdrawal and inactivity terms where applicable.
- Compare execution conditions as well as the advertised minimum spread.
Variable spreads can widen. An execution price can differ from a displayed quote, especially around news or thin liquidity. A lower headline cost does not establish better execution or account protection.
Keep a comparison record
Write down the legal entity, account name, instrument, date and source of each figure. Treat missing information as a question for the broker rather than as a zero fee. Forex.com.bd's broker comparison can organize your shortlist; the current account agreement determines the terms that apply to you.
This guide explains comparison arithmetic and is not a recommendation to open an account or trade.