Spreads, Commissions & Swap Explained
Every trade has a price. Knowing exactly what you pay — and when — is the difference between a strategy that works and one that bleeds slowly.
The spread
The spread is the gap between the bid (sell) and ask (buy) price. Buy at 1.1002, sell at 1.1000, and you are immediately 2 pips underwater. Tighter spreads mean cheaper entries and exits, which matters most for frequent traders.
The commission
ECN and raw-spread accounts charge a per-lot commission instead of (or on top of) a wider spread. A $3.5 commission per side on a standard lot is often cheaper than a 1-pip markup once you trade volume. Always add it back when comparing.
Swap (overnight financing)
Holding a position past the daily cut-off incurs swap — interest paid or earned on the rate differential between the two currencies. It is small per night but compounds; negative-swap strategies (like carry trades) live or die on it. Islamic swap-free accounts replace it with a fee.
Hidden costs
Watch inactivity fees, withdrawal fees, and currency-conversion charges on deposits. None appear on the trade ticket but all reduce your net return.
Related glossary terms
New to the jargon here? These plain-English definitions will help.
