Spread, commission and swap: the hidden costs of CFD trading

Two traders take the same gold trade with the same entry and exit. One finishes up €40, the other up €22. Same chart, same idea. The difference is costs, and most beginners never add them up.

Spread: you start every trade slightly negative

The spread is the gap between the buy (ask) and sell (bid) price. You buy at the higher price and can only sell at the lower one, so the moment you open a trade you're down by the spread.

Spread cost = Spread in $ × 100 × Lots (for gold)

A $0.35 spread on 0.10 lot costs $3.50. Spreads are not fixed: they widen at the daily rollover, around big news (NFP, CPI, FOMC) and when markets are thin. A trade that looks fine at midday can be expensive at 23:00.

Commission: the price of "raw" spreads

Raw-spread (ECN) accounts show tighter spreads but charge a commission per lot, often on both the opening and the closing side. Standard accounts usually have no commission but wider spreads. Neither is "free". Compare the total cost of a typical trade on both accounts, not just the headline spread.

Swap: the cost of holding overnight

Every CFD position open at the daily rollover is charged (or occasionally paid) a swap, the overnight financing.

• On gold, long positions are usually charged a swap.
• Many brokers charge three days of swap on Wednesday night (or another fixed day) to cover the weekend. Check yours.
• Swaps are small per night but add up quickly on swing trades held for weeks.

Swap-free (Islamic) accounts replace swaps with other fees after a set number of days. Read the conditions.

Slippage: the cost you don't see coming

When the market moves fast, your order fills at the next available price, not the one you clicked. Stop losses are market orders once triggered, so in a news spike a $5 stop can fill $7 away. That is why position sizing should leave a little room for slippage, and why many traders stay flat into major releases.

Currency conversion

If your account is in euros and gold is quoted in dollars, every profit and loss is converted at the current EUR/USD rate. Small, but real, and it changes your € risk even when the chart doesn't move.

A quick cost check

Before a trade, ask:

1. What is the spread right now, and is it normal for this time of day?
2. What commission will I pay to open and close?
3. Will I hold overnight? On a triple-swap night?
4. Is there a major release before my target is likely to be hit?

If costs eat more than 10–15% of your expected reward, the trade probably isn't worth taking. A good setup with bad costs is a bad trade.