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Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
PipThe smallest usual price step. On EUR/USD, one pip is 0.0001.
LotTrade size. 1 lot = 100,000 units of the first currency. 0.10 lot = 10,000.
Pip valueWhat one pip is worth in money for your trade size. Your platform shows it.
SpreadThe gap between the buy and sell price. You pay it the moment you open a trade.
CommissionA fee per trade, charged on some accounts when you open and again when you close.
SwapA fee (sometimes a credit) for keeping a trade open overnight. It is charged every night.
SlippageThe difference between the price you asked for and the price you got.
The formula
Total cost = spread + commission + swap + slippage
Worked example
You buy 0.10 lot of EUR/USD and keep the trade open for 3 nights. Your account is €1,000. On EUR/USD, 1 pip on 0.10 lot is worth 1 US dollar; at an example rate of 1.08, that is about €0.93 in euros.
Cost
How to work it out
Amount
Spread
1.2 pips × €0.93
€1.12
Commission
€3.00 per side per lot × 2 sides × 0.10 lot
€0.60
Swap
€0.70 per night × 3 nights
€2.10
Slippage
0.3 pips × €0.93
€0.28
Total cost
€4.10
Share of a €1,000 account
0.41%
These are example numbers to show the maths. They are not any broker's prices. Use your broker's own numbers.
Two things to notice. The swap is the biggest cost here, because the trade stayed open three nights. And you pay the full €4.10 whether the trade wins or loses.
Your worksheet
Fill this in for your next trade, before you place it.
Spread: ___ pips × pip value ___
Commission: ___ per side × 2 × lots ___
Swap: ___ per night × nights ___
Slippage: ___ pips × pip value ___
Total cost
Total ÷ account balance × 100 = ___ %
Where to find each number
Spread: the platform's quote window, or the broker's spreads page. Look for the typical spread, not the minimum.
Commission: the fee schedule for your account type.
Swap: the instrument's contract specification in the platform. Some brokers charge three nights on one weekday to cover the weekend.
Slippage: your own trade history. Compare the price you asked for with the price you got.