Spread, Commission and Swaps

Every trade an Expert Advisor (EA) places costs money before it makes any: the spread, often a commission, and a swap for every night it's held open. These costs decide whether a strategy that looks profitable on paper makes money in your account, and one of them, commission, changes the lot size your risk allows. This page explains each one and where to find it in MetaTrader 5 (MT5).

The Spread

Every symbol has two prices:

• Bid: the price you sell at.
• Ask: the price you buy at.

The spread is the gap between them: Ask − Bid. A buy opens at the Ask and is closed at the Bid; a sell opens at the Bid and is closed at the Ask. So every new trade starts at a small loss, the size of the spread.

The symbol's Specification window (Market Watch, right-click the symbol, Specification) shows the spread in points (page 0.1 explains points). If it says floating, the spread moves with the market. It's usually narrow in busy hours and can widen sharply around news, at the daily rollover and when the market is quiet. A floating spread you read today is a reading for today, so note the date with it.

Why it matters for an EA: an EA that trades often, or aims for small profits, pays the spread on every trade. And some EAs refuse to trade above a maximum spread you set in their inputs, so a wide spread can stop one trading altogether.

Commission

Many brokers charge a commission on top of the spread, usually on accounts with tighter spreads. It usually shows in the Commission column of MT5's trade history, but some brokers charge it at the end of the day or month as a separate balance entry, so take the figure from the broker's terms, not from one trade. Brokers charge it in different ways:

• Per lot, per side: a fixed amount for each lot when the trade opens, and again when it closes.
• Per lot, round trip: one amount per lot covering both.
• Per deal, as a percentage of the trade's value, or in points.
• Sometimes in tiers that change with how much you trade.

The broker's published terms say which. For your own sums, turn it into one figure: the round-trip commission per lot, in your account currency. Per lot per side, in money? Double it. In another currency? Convert it at a rate you note with its date. Charged any other way (per deal, as a percentage, in points or in tiers), write "unknown" and ask the broker.

Swap

A swap is a charge or credit for holding a position past the end of the trading day. It reflects the interest-rate difference between the two currencies, plus the broker's markup, and it can be negative or positive. It differs for buys and sells.

The Specification window shows:

• Swap long and Swap short: the rates for buys and for sells.
• Swap type: the unit they're in, such as points, a currency, or a percentage.
• Swap rates: a multiplier for each day of the week. Many brokers charge three days' swap on one weekday, to cover the weekend.

Record the swap, but leave it out of a trade's loss at the stop, because nobody knows in advance how long a trade will be held. For an EA that holds trades for weeks, swap can add up to a real cost, and it's worth checking against the seller's results.

The Total Cost

Spread, commission and swap together are your trading costs. Add what you pay for the EA and any hosting, and that's what a strategy has to beat before it makes you anything. A backtest that assumes lower costs than your broker charges will look better than your account does.