Question: How to calculate Spread/Trading Cost on HotForex MT4 and MT5 platforms?
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Spread is the difference between “Bid” and “Ask” prices.
In case your Forex broker doesn’t charge you extra trading commissions, it is basically the only main trading cost that you may want to be aware of.
1 lot with 1 pip is 10 dollars
“1 lot with 1 pip is 10 dollars”.
Of course, the amount varies depending on the base currency though, you may want to remember this concept.
For example, if you 1 lot position of EURUSD and the price has moved 1 pip from the open price.
Then you have made 10 USD of profits or loss in this case.
It is the same for calculating the spread costs, as in if the spread is 1 pip, then the trading cost is 10 dollars per 1 lot transaction.
If you know the above basic concept, calculations should be much easier for other amounts too.
Calculation for Profit/Loss
If you like to know how it is really calculated, please refer to the following calculation and example.
Trading Costs = spread in points(the difference of bid and ask price) * amount of units(1 lot is normally 100,000 units)
Trading Costs in case of EURUSD= Spread in Points(1.12186 – 1.12176) * 100,000(it is 1 lot) = 10 USD
In this case, 10 USD which is 1 pip is the trading cost.
HotForex offers calculator on their Official Website which you can use for free.
