Headline spreads are marketing. The all-in cost is what matters.
Step 1 — find the right number
Brokers advertise "from 0.0 pips" or "average 0.6 pips". The "from" number is the best case under perfect liquidity; the "average" number is closer to reality. Use average.
Step 2 — convert to dollar cost per lot
Spread cost ≈ spread × pip value × lot size. EUR/USD at 0.6 pip on 1 standard lot ≈ $6.
Step 3 — add commission
Some accounts charge $X per side or $Y round-turn. Convert all numbers to round-turn for comparison. Total cost = spread cost + commission round-turn.
Step 4 — add average swap
For positions held overnight, swap is part of cost. Multiply by average holding nights.
Step 5 — adjust for slippage
This is harder to estimate but matters. Trade a small live position; track entry vs. requested price. Slippage is real cost.
Step 6 — compare brokers on the all-in number
Use the spread-cost calculator for the math. The broker with the lowest headline spread is sometimes the most expensive once commission is added.
Next steps on ShaFX
- Free trading calculators — position size, pip value, margin, risk/reward, drawdown.
- Take a quiz on this topic and see what you missed.
- Glossary — precise definitions for every term used here.
- Compare brokers using our methodology.