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Every forex trade has a cost, even when a broker advertises "zero commission". Some costs are obvious, like the spread you see on screen. Others are easier to miss, like overnight financing or fees on deposits and withdrawals. Understanding all of them helps you compare brokers fairly and keeps small costs from quietly eating into your results. This guide covers spreads, commissions, swaps and account fees, with simple ways to calculate what you actually pay.

The spread: the built-in cost of every trade

Every currency pair has two prices:

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

The ask is always slightly higher than the bid. The difference is the spread. If you buy and immediately sell, you lose the spread, which is why every new position starts slightly negative.

Pips and how to measure the spread

Spreads are measured in pips. For most pairs a pip is the fourth decimal place (0.0001). For pairs involving the Japanese yen, it is the second decimal place (0.01). Many platforms also show a fifth decimal, called a pipette or fractional pip.

Example: if EUR/USD shows 1.10000 bid and 1.10012 ask, the spread is 0.00012, or 1.2 pips.

Turning pips into money

For pairs where the US dollar is the second currency, one pip is worth about:

  • $10 on a standard lot (100,000 units)
  • $1 on a mini lot (10,000 units)
  • $0.10 on a micro lot (1,000 units)

So a 1.2-pip spread costs about $12 on a standard lot, $1.20 on a mini lot and $0.12 on a micro lot.

Fixed vs. variable spreads

  • Variable (floating) spreads change with market conditions. They are tightest when liquidity is high and widen during quiet periods or volatile news.
  • Fixed spreads stay the same in normal conditions. They are more common with dealing desk brokers and are usually set wider to cover the broker's risk.

What makes spreads widen?

  • Liquidity: major pairs like EUR/USD usually have tighter spreads than exotic or crypto pairs.
  • Time of day: spreads are often tightest when major sessions overlap and widest around the daily rollover. See the best times to trade forex.
  • News: major economic releases can widen spreads sharply for a short time.
  • Weekend gaps: prices can open on Monday far from Friday's close, and spreads are often wide at the open.

Commissions

Some accounts charge a separate commission on top of the spread, usually per lot traded and often charged on both opening and closing a position. Commission-based accounts are common with ECN brokers, where you get raw market spreads and pay the broker separately. Commission-free accounts usually build the broker's fee into a wider spread instead.

Neither is automatically cheaper. To compare, convert both to the same unit:

Total cost per round trip = (spread in pips × pip value) + commission for opening and closing

For example, an account with a 0.2-pip spread plus a commission may cost less or more than an account with a 1.2-pip spread and no commission, depending on the commission amount. Do the arithmetic for the pairs and position sizes you actually trade. Our comparison of ECN vs. STP brokers explains why pricing differs between models.

Swaps (overnight financing)

If you hold a position past the daily rollover, usually around the end of the New York session, you pay or receive a swap, also called rollover or overnight financing.

  • Swaps reflect the interest rate difference between the two currencies in the pair, plus the broker's charges.
  • They can be negative (a cost) or occasionally positive (a credit), and long and short positions on the same pair have different rates.
  • Many brokers charge a triple swap on one weekday to account for the weekend.
  • Crypto pairs often carry their own overnight financing charges.

For short-term traders who close positions the same day, swaps may not matter. For swing and position traders, they can become one of the largest costs over weeks or months.

Account fees

Beyond trading costs, check the broker's schedule for:

  • Deposit fees: charges for funding by card, bank transfer or crypto, plus any network or processing fees from third parties.
  • Withdrawal fees: fixed charges per withdrawal or network fees for crypto transfers.
  • Currency conversion: costs if your deposit currency differs from your account currency.
  • Inactivity fees: monthly charges if the account is not used for a period.
  • Platform or data fees: occasionally charged for premium tools.

Slippage: the hidden cost

Slippage is the difference between the price you expected and the price you got. It happens in fast markets when prices move between placing and filling an order. Slippage can be positive or negative; with fair execution you should see both over time. Limit orders can help control the price you get, at the risk of not being filled.

Putting it together: a worked example

Imagine a trader who places 20 round-trip trades a month, each one mini lot on EUR/USD, closing each trade the same day.

  • Average spread: 1.0 pip × $1 = $1.00 per trade.
  • Commission: none on this account.
  • Swaps: none, because positions close before the rollover.
  • Monthly trading cost: 20 × $1.00 = $20, before any slippage or account fees.

If the same trader moved to standard lots, that cost would be about ten times higher. Costs scale with position size, which is another reason leverage needs care. See How Does Leverage Work in Forex Trading?

How to keep trading costs down

  • Focus on liquid pairs, which usually have tighter spreads.
  • Trade during active sessions and avoid the rollover period when spreads widen.
  • Be careful trading immediately around major news.
  • Avoid overtrading; every trade pays the spread. Common forex trading mistakes covers why this matters.
  • Check swap rates before holding positions for days or weeks.
  • Review the full fee schedule, not just the headline spread.

Spreads at Clarity FX

Clarity FX is an ECN broker, so spreads come from the market and vary with liquidity rather than being fixed by a dealing desk. Accounts are funded with cryptocurrencies and there is no minimum deposit. You can compare account types and review deposit methods before you start.

Key takeaways

  • The spread is the gap between bid and ask, and you pay it on every trade.
  • Commission accounts usually pair raw spreads with a separate fee; compare the total, not each part.
  • Swaps apply to positions held overnight and can add up for longer-term trades.
  • Check deposit, withdrawal, conversion and inactivity fees as well as trading costs.
  • All costs scale with position size, so trade sizes that fit your account.

Trading forex and crypto on leverage carries a high risk of loss and may not be suitable for all investors. This article is educational and not financial advice. Read our risk disclosure.