BullsEdges algo trading guide: Every trade pays spread, many pay commission, and overnight trades pay or earn swap. Learn how each cost works and how much it can eat from a strategy.
A strategy's gross profit is not what you take home. Three costs are taken out of almost every trade, and for short-term strategies they often decide whether the system makes or loses money.
BullsEdges algo trading application: Subtract spread, commission and swap from the strategy's expected return before deciding that a small target is viable.
Spread
The spread is the difference between the bid (sell) and ask (buy) price. You buy at the higher price and sell at the lower one, so every trade starts slightly negative.
- On EURUSD, a typical spread might be 0.1-1.0 pip.
- On gold, spreads of $0.10-$0.40 are common in normal hours, wider at rollover and during news.
Why it matters: a scalper that targets $1 on gold and pays $0.30 of spread is giving away 30% of every winning trade before anything else.
Commission
ECN and raw-spread accounts charge a fixed commission per lot, often $5-7 per round turn on forex. The spread is lower, but you pay both. Compare total cost per lot, not just the advertised spread.
Swap (rollover interest)
If a position is held past the broker's daily rollover time, interest is charged or paid based on the difference in interest rates between the two currencies (or the financing cost for gold). On many brokers:
- Gold positions are charged swap in both directions.
- One day of the week, usually Wednesday, charges triple swap to cover the weekend.
Why it matters: a strategy that holds positions for days, like a grid basket, can lose a meaningful share of its profit to swap. In one multi-month test we ran, swap took about a fifth of the profit.
Slippage
Not a fee, but a cost: the difference between the price you wanted and the price you got. Market orders and stop orders slip most during news and thin liquidity.
How to measure the real cost
- Take your backtest's average trade profit.
- Subtract the average spread x position size, commission and expected swap.
- Check whether what remains is still clearly positive.
A useful rule: if costs are more than about a third of the average winning trade, the strategy is very sensitive to execution and broker conditions.
Reducing costs
- Trade during the most liquid hours.
- Avoid opening new trades around rollover.
- Use a spread filter in the EA: no new entries when the spread is above a set limit.
- Choose the account type (standard vs raw + commission) that is cheaper for your trade frequency.
- Prefer longer holding times or larger targets if costs dominate.
Costs never show up on the chart, but they show up in the account every single day.
Trading forex and gold carries a high level of risk and may not be suitable for every investor. Past performance and backtests do not guarantee future results. This article is education, not financial advice.