Trading Fees: Spread, Markup, Margin & Position Size

The first question: what is the price charged for?

With leveraged trading, there are three sizes apart: the account value, the bound margin, and the full position. A low margin can allow you to enter a larger position. However, it does not reduce the spread amount for this position. Decisive is the traded quantity and its monetary value per price movement.

“Without commission” describes a form of accounting. It does not automatically mean “without trading costs”. The spread may include remuneration; in addition, funding and other contractual fees may occur. For example, a provider describes a spread model with compensation included therein and mentions additional financing and account costs elsewhere. Such statements must be read together.

Differentiate fees and execution effects

The additional categories are based on a provider price list, but do not apply to every broker. The specific contract decides whether and when they accrue.

For comparisons, we therefore use “cost balance”: it includes fees paid and separately reported execution effects. Taxes are a different consideration and are not included in the calculator.

Market spread, markup and the client quote

Bid is the offered sales price, Ask is the offered purchase price; the customer spread is Ask minus Bid. As an analytical model, you can distinguish between a reference spread and an additional markup. The mark-up can be included in the purchase price, the sales price or both sides.

A reference spread is only useful with a defined source, time, volume and comparable instrument. In the case of OTC Forex, there is no single universally binding market spread; moreover, a CFD on an index is not automatically the same instrument as the index future. Price preparation, volume and execution conditions can explain differences. Our decomposition is therefore a method of investigation, not an alleged insight into any brokerage calculation.

Fictitious example: reference bid 1.10000 and reference ask 1.10003 give 0.3 pip. A symmetrically distributed total markup of 0.7 pip shifts customer prices to 1.099965 / 1.100065; the customer spread is 1.0 pip. The example uses finer price points than some real offers and serves only as an explanation.

A visible spread of 1 pip does not prove that 0.7 pip is broker compensation, nor that the broker hedges externally to 0.3 pip. This would require simultaneous reference data and documented conditions. Broker Role and Hedging

Fixed and Dynamic Spreads

A provider identifies market openings/closures and special events as situations for broader spreads. This is a specific provider description, not a justification for any deviations.

Our comparison method: look at the same instruments, time windows and sizes; examine median, particularly broad phases and executed trades instead of just the lowest advertising value. A fixed spread does not yet guarantee guaranteed execution at the displayed price. A variable spread is not automatically cheaper.

Counting the spread correctly on the round trip

Own calculation model for symmetric quotes: Purchase at ask = medium price + half entry spread. Subsequent closure at bid = new medium price − half exit spread. Thus, the spread exposure to the mid-price movement is the sum of the two half-spreads.

With the same spread when opening and closing, this results in a full spread. In the usual immediate sale without price movement, the difference is also Ask minus Bid. Two full spreads per round trip would be double counted in this model. Different entry and exit spreads are taken into account with their means.

This is a price comparison calculation, not an additional invoice from the broker. In the case of a profit/loss calculation from actual ask/bid execution prices, the spread is already included. It must not be withdrawn there again. The separate Commission is different: if it is raised on each side, it must be taken into account for both sides.

Margin is collateral, rather than the fee base

Simplified own example: nominal value 30,000 EUR, leverage 30 and spread exposure 6 EUR. The model margin is EUR 1,000, of which the spread is 0.6%. If the same nominal value is held with leverage 10, the model margin increases to EUR 3,000 – the spread remains EUR 6.

For an unchanged position, leverage changes the capital tied up, rather than automatically changing the absolute spread cost. A fixed margin budget is different: in this simplified model, EUR 1,000 supports notional exposure of EUR 10,000 at 10:1 leverage or EUR 30,000 at 30:1. If the user actually trades the larger position, volume-dependent costs triple.

MetaTrader documents different margin procedures, additional factors and currency conversion. “Nominal value/leverage” is therefore only our simplified model for a single linear position; it does not replicate full brokerage or portfolio margin.

Also, spread as a percentage of margin is not a return ratio. For the debit of the account, additionally look at the costs relative to the equity. Again, the entire equity is not equal to the available free margin.

Examine Position Size, Margin and Costs Yourself

What exactly does the calculator calculate

Scope: positive prices, linear instrument, constant assumed contract size and conversion. No option pricing model, no inverse contract settlement, and no dynamic margin algorithm. “price step” is the unit you specified; a pip and an MT4/MT5 point are not always the same.

Calculation sequence: lots × contract units = quantity. Quantity × reference price × conversion factor = nominal value in account currency. Quantity × Size of price step × Factor = monetary value of a price step. Spread cost = step value × (entry spread + exit spread) / 2.

Commission per page = greater value from volume-related remuneration and minimum commission; both sides are added. For basis points, the same constant reference notional value is used for both sides. Real variable closing prices, partial stores, seasonal prices and separate ticket minima are not reproduced.

The loss budget mode searches for the largest size in the plumbing grid, whose assumed middle price movement plus charges does not exceed the budget. Financing credits and cheap slippage do not increase this size. A minimum fee can already exhaust small budgets; then the result is zero.

Margin budget mode derives the size from simplified margin alone. It does not reserve additional funds for spread, further positions or safe distance. It is therefore not a release signal for a real order. The allowed size must be matched against the actual symbol and account terms.

Is a spread model really cheaper?

It may be cheaper under certain conditions. The cause can be, for example, an avoided minimum commission for small tickets. But the model label alone says nothing about the total cost. A larger margin can more than eat up a failing Commission.

Fictitious comparison at $10 pip value per lot and unchanged rates. Model A: 1.2 pip spread, no separate commission. Model B: 0.2 pip spread plus $3.50 per lot and side. Both initially without minimum fee, financing or slippage:

These tariffs do not belong to any designated broker. The presets above recreate them. A “Raw” or “STP” label does not replace the tariff comparison or proof of execution. Classify model terms cleanly

The effect of holding time and financing

Overnight financing can be based on interest rates, mark-ups or currency exchange rates, depending on the instrument. A provider distinguishes its system for stock / index CFDs from forex / metals and refers to priced financing for certain futures products. These constructions must not be drawn together into a single global formula.

A forex provider publishes its own financing methodology. Costs or credits depend on the specific product and its billing.

Our simple annual interest rate model serves for size comparison: 100,000 EUR nominal value × 7% × 7/365 give a charge of 134.25 EUR. Based on EUR 3,333.33 model margin, this is around 4.03%. The 7% is a fictitious net assumption; seven accounting days are not always seven calendar nights.

Roll-over time, multiple loads, weekends and holidays as well as changing conversion must be checked with the provider. A funding entry can also be a credit; this is neither safe nor the same for each direction.

What is easily lost in advertising and account comparison

1. Confuse the minimum spread with the actually paid spread.
2. Relate costs to the margin and thereby overlook their coupling to the full position.
3. Read commission per page as a price for the entire round trip.
4. In the case of a calculation from execution prices, subtract the spread again.
5. Consider frequent trades only per trade: 100 identical round trips of 10 EUR result in 1,000 EUR before a trade performance is evaluated.
6. Consider opposing client positions to be cost-neutral: Financing rules can record both positions separately.
7. Fixed costs such as VPS, data or subscription for low activity do not apply to the actual usage volume.
8. Change account currency without reallocating tick value, conversion and money inputs.

In its assessment, the FCA complained, inter alia, about gaps beyond the spread analysis and the financing of opposing positions. This is a dated British supervisory finding, not a blanket statement about all providers.

A reliable cost question for the provider

‘Please show for this symbol, this volume, my account currency and this holding period the total entry and exit costs: applied spread, commission including minimum amount, financing, conversion and other fees.’; Please specify the pricing basis, roll-over time and possible exceptions.

Compare the answer together with price list, specification and own versions. Read the specifications → · Evaluating Reports · Understanding Broker’s Revenue Sources

Sources & scope

Check the evidence.

1. FCA · CFD Price and Value Review, 13.11.2025

   Official multi-company audit in the UK supervisory framework; no findings about any broker. Retrieved 30.09.2026.

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2. MetaTrader 5 · Margin calculation

   Different symbol- and account-dependent methods; the simplified calculation formula is not a complete MT5 margin algorithm.

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3. OANDA US · Pricing

   Supplier source on own models; shows examples of spread remuneration and separate commission, not a universal tariff structure.

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4. OANDA US · Spreads and Margin

   Provider description of spread changes; US-specific leverage rules are not transferred to other countries here.

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5. IG International · Cost Types

   Provider source to own fee structure; respect product and country borders. Current tariff amounts are not adopted as a market standard.

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6. OANDA US · Funding

   Provider source for own financing system; billing and credits are contract-dependent.

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