The three costs: spread, commission, swap
What you learn in 3 minutesA trader opens a USD/INR position and closes it minutes later. The price has barely moved, yet the account balance is lower. The difference is the cost of the trade, not the market. This lesson shows the three costs you pay: the spread, the commission, and the swap. On a standard lot of USD/INR, one pip is ₹10. The spread alone can be a few rupees per pip, so a small move in price can still leave you with less money than you started with. By the end, you will know how to add up these costs before you click buy or sell.
Cost of a 1 standard lot USD/INR round trip
| Step | Amount | Note |
|---|---|---|
| Spread on entry | ₹12 | 1.2 pips at ₹10 per pip on one standard lot |
| Commission | ₹7 | A fixed charge on some account types, converted from dollars at the rate your broker uses |
| Total cost to open and close | ₹19 | Spread plus commission, before any swap |
The broker may round the spread, add a markup, or charge a different commission. Swap is added for every night the position is held, and it varies by broker and by day.
The mistake people make here
The common mistake is to look only at the spread and forget the commission and swap. A trade that seems to break even after a small price move can still lose money once all three costs are counted. Before entering, check the spread, the commission for your account type, and the swap rate for the instrument. If you plan to hold overnight, add the swap to your cost. Do this on a demo account first, using small amounts, so the numbers become familiar.Check yourself
On one standard lot of USD/INR, the spread is 1.2 pips and the commission is ₹7. What is the total cost to open and close the trade, before swap?
1.2 pips × ₹10 per pip = ₹12. Add the commission of ₹7. Total = ₹19.
If you hold the position for two nights and the swap is ₹5 per night, what is the total cost now?
Start with ₹19. Add 2 nights × ₹5 = ₹10. Total = ₹29.