Forex & EA basics
Forex Spread, Slippage and Commission: The EA Cost Checklist
Spread, commission, slippage and overnight financing are different parts of trading cost. Evaluate them together, using the contract and account actually being tested. A smaller advertised spread does not automatically mean a lower total cost for an EA.
Separate the four components
Spread is the difference between bid and ask. Commission is an explicit charge under the account's fee schedule. Slippage is a difference between a reference or requested price and the executed price, and it can be favorable or unfavorable. Overnight financing depends on the instrument, direction and holding period.
For platform terminology, see Market Watch and order execution. Check the broker's current contract and fee schedule for the actual charges rather than assuming that an account label defines them.
A like-for-like cost example
Consider two hypothetical accounts for an order size where one pip is worth $1. Account A has a 1.2-pip spread and no commission; Account B has a 0.3-pip spread and a $0.80 round-trip commission. If prices do not move, and financing and slippage are zero, the approximate round-trip costs are:
| Account | Calculation | Cost |
|---|---|---|
| A | 1.2 × $1 | $1.20 |
| B | 0.3 × $1 + $0.80 | $1.10 |
The quoted spread advantage is $0.90, but the all-in advantage under these assumptions is only $0.10. Different execution could reverse the ranking. These are invented figures for arithmetic, not quotes from a broker or evidence about either MQLume product.
Avoid counting the same cost twice
When calculating profit directly from actual entry and exit fills, the effect of spread and execution is already present in those prices. Do not subtract a theoretical spread again. Add separately charged items only where they are not already included in the result you are reading.
Keep units consistent: pips, points, price amounts, lots and account currency are not interchangeable. For gold, use the contract-size and tick-value guide rather than assuming a universal pip value.
Make costs part of the test plan
Record the cost settings used in every comparison. MT5's advanced tester settings support account and commission assumptions. Verify the resulting report instead of assuming a fee was applied because the account is called “RAW”.
As a sensitivity exercise, compare the baseline with a deliberately less favorable cost scenario. State what you changed and why. If a small cost increase erases the apparent advantage, the strategy may depend on execution conditions that need closer investigation.
What to record during demo observation
Record the signal time, requested action, quoted bid/ask, order volume, execution time and fill price when available. Add commission and financing entries from the account history. Distinguish observed execution from values reconstructed afterward.
A demo log can help diagnose software and assumptions, but demo execution is not a guarantee of live fills. Continue to the report-reading guide with costs and exposure clearly documented.
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