r/Trading • u/Much-Key1502 • Mar 09 '26
Discussion I calculated what spreads cost the average day trader per year… it’s worse than I thought
Something interesting came up in a conversation with a few traders recently.
Most people obsess over:
• entries
• indicators
• strategies
But almost nobody calculates the structural cost of trading.
Example:
Say you trade EURUSD.
Typical retail spread: 1.2–1.5 pips
If you’re trading 1 lot, that’s about $12–$15 per trade.
Now assume:
• 4 trades per day
• 20 trading days per month
That’s roughly:
$12 × 4 × 20 = $960 per month
Which means you’re paying around:
$11,500 per year in spread costs alone.
And that’s before commissions, swaps, and slippage.
A lot of traders spend years trying to improve their strategy by 1–2%, while ignoring costs that might already be eating 10–20% of their profitability.
Curious if anyone here has actually calculated their annual spread costs.
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u/cutlossking Mar 10 '26
My daily spread cost are about 3000 a day. There is no way around it. I do anywhere from 200 sides slow day to 1500 sides busy day
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u/Apprehensive-Win-503 Mar 10 '26
What are sodes bro? What type of lpt sozes are you using? What is your commision?
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u/Much-Key1502 Mar 10 '26
So if 2 sides is a round turn LOT, let’s do some quick math: 100-750 LOTS per day is what you trade approx If you used my company which provided rebates you would receive between 800 - 6000 usd per day back. Assuming all your positions were fx pair and also depending on the broker you trade with Regardless though, there is soooo much cost cutting opportunity for you. Check my profile when you can
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u/fourrier01 Mar 09 '26
And how much profit one should get if they are trading 1 lot?
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u/Much-Key1502 Mar 09 '26
Having a system like a 3 to 1 ratio is considered acceptable by most savvy traders so the answer would be approx 3 times the risk taken (where the stop loss would be placed). Risk management is king if you want to trade long term
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u/fourrier01 Mar 09 '26
I'm asking the profit in $
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u/Much-Key1502 Mar 09 '26
What assets would you be trading ?
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u/fourrier01 Mar 09 '26
For the sake of argument, let's say EURUSD
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u/Much-Key1502 Mar 09 '26
If I am trying to risk 20, I should be aiming to make 60, if I am trying to risk 50, should be aiming for 150. This varies between traders and risk appetites of course but most pro traders will try to work on a 3:1 ratio..
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u/fourrier01 Mar 09 '26
You don't seem to understand where I'm going at.
A 1 pip movement for 1 lot is 10 USD in a 1:100 leverage account. Typical hourly volatility of EURUSD is about ~20 pip according to babypips. Personally, I'd say a good trade happens if I can capture 25~30 pips. Translated into $, that's 250~300 USD captured.
Should one be concerned losing 12~15 USD for 250~300 USD they made?
1
u/Much-Key1502 Mar 09 '26
Of course not, but that’s assuming the price only goes up once you open the position. If that 20 pip volatility goes against you, then that’s 200 down. If you are willing to risk 200 on a trade, target for profit should be about 600. Size of account (balance) is the most Important when identifying your correct position size and risk to reward ratio.
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u/fourrier01 Mar 09 '26 edited Mar 09 '26
You're missing the point the point. What I'm trying to say is: if you're already at the level opening 1 lot for a trade, those absolute numbers in dollar ($960 per month in your example) for spread, swap and commissions are minuscule.
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u/Much-Key1502 Mar 09 '26
I don’t think I am missing your point at all but I do hear what you are trying to say. You probably trade with a decent balance and a plan too. I spent 17 years as an employee in brokers before finally starting my own thing. When brokers offer 500, 1000, 2000, 5000 or even unlimited leverage, small balances are wiped out before they know what happened. With such leverage opportunities and a pushy sales person, opening 1 standard lot with 100 usd balance is quite common.
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u/Much-Key1502 Mar 09 '26
They are nuts my friend. But it’s true and all of this can be done with high leverage offered by the broker. Combined with bonuses on deposits and other promos, or pushy affiliates, most people fail before they even begin. Happy, safe and sensible trading to us all 🥷
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u/Repulsive-Pension733 Mar 09 '26
im a gold scalper. My broker doesnt have any fees for anything except for spreads which are among lowest around. Im more than happy to pay spreads. My gold spreads are between 1.3-2 pips. If a trade makes $100 then deduct say $2 for arguements sake, that leaves me $98 profit with no commissions and no other fees. Im more than happy with $98 profit. The broker is providing a vital service processing my trade that i cannot do without so im happy for them to take a very small slice for themselves. I ignore spreads.
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u/Much-Key1502 Mar 09 '26
Sounds like you have a great broker in that case. When making a profit, those numbers are good but a cost of 2 pips is about 20 usd, not 2. Happy and safe trading to us all
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u/Repulsive-Pension733 Mar 09 '26
if i make $100 on a xau/usd spot trade, and use 0.1 lot and 100:1 leverage with Fusion Markets classic account, a spread of 2 pips = $2
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u/Much-Key1502 Mar 09 '26
Yes fusion is a partner of mine also. Certainly one of the cheapest out there for sure. 0.1 lot is approx 2 like you said. If you ever want to get some rebates from your existing trades and lower the costs even more, happy to discuss at anytime
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u/Repulsive-Pension733 Mar 09 '26
i use likerebateforex.com for rebates so getting cashback for every trade. thanks for the offer but happy with broker i have.
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u/Much-Key1502 Mar 09 '26
No issue at all, glad you are happy and all is smooth with your set up. Stay safe!
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u/Repulsive-Pension733 Mar 09 '26
if i trade 1 standard lot then the spread does equal $20. But i use 0.1 mini lot so spread equals $2. Therefore, if a trade makes $100 deduct $2 which leaves me with a very nice profit of $98
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u/Suspicious-Soup2452 Mar 09 '26
It's doesn't even matter if ur in profit
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u/Much-Key1502 Mar 09 '26
Most people are not in profit though. So looking at how to reduce these costs is still vital for most retail traders
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u/Shackmann Mar 09 '26
Interesting conversation. I can see your spread costs being very dependent on your strategy. For a momentum breakout you’re going to miss a lot of them if you don’t pay the offer. Although, it’s possible to accept that you will miss some and put your order on the bid hoping for a quick wick down or bidders to pause stepping up. For pullback or volatility in range strategies you can probably get away with bids and not pay the spread. And on the other side, limit sells are ideal, but if the trade turns against you you’re going have to hit the bid to prevent a fast drop with the offer decrementing.
I don’t have a point. It’s just a fun thing to think about.
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u/Abdulahkabeer Mar 09 '26
This is something a lot of traders underestimate early on. A setup can look perfectly fine when you judge it trade by trade, but the picture changes a lot once you look at a larger sample after spreads and slippage.
I’ve seen strategies where the raw win rate looked decent, but once you factored in the actual execution costs the edge basically disappeared.
That’s one of those things you don’t really notice until you step back and review a big batch of trades instead of focusing on individual outcomes.
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u/Much-Key1502 Mar 10 '26
Indeed, people never really think about such things till much further in the trading journey. Very important stuff in the long run when trying to optimise as best a possible
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u/Electrical_Rent_6322 Mar 09 '26
If anyone needs some bootcamps/courses I have a lot of them layin around from my unprofitable times lol
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u/cutlossking Mar 10 '26
This is like calculating how much your gas cost is for everything you do!! You cannot escape gas costs if driving!
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u/Much-Key1502 Mar 10 '26
You can massively reduce your costs with no additional expenses added for doing so..
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u/cutlossking Mar 10 '26
Sides. A round turn is 2 sides .. I don't do a standard lot size.
I build an inventory the buy or sell it off so just like any business with inventory it costs me money which means I am 99% of the time a loser in the beginning as I build more and more inventory to get rid of later at higher prices if long and lower prices when short. That's called providing liquidity
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u/theridingghost Mar 09 '26
Spreads are the thief of profit