The cost, four ways
per trade = spread × pip value + commission
A 1.2-pip spread on a standard lot is $12, plus $7 commission — $19 a trade. Four trades a day, 21 days a month, and that is $1,596 a month and $19,152 a year.
The yearly figure is the one worth putting beside your annual profit. For many active traders the cost of doing business is a larger number than the profit, and it is invisible because it never appears as a losing trade.
The ratio that actually decides things
The absolute cost tells you almost nothing. The cost divided by your stop distance tells you everything:
cost in R = (spread × pip value + commission) ÷ (stop in pips × pip value)
| Stop | Cost in R | What it means |
|---|---|---|
| 100 pips | 0.02R | irrelevant |
| 30 pips | 0.06R | minor |
| 15 pips | 0.13R | noticeable |
| 8 pips | 0.24R | a quarter of every trade |
| 3 pips | 0.63R | the strategy is paying the broker |
Same spread, same commission, same broker. The only thing that changed is how far the stop sits — and it is the difference between a viable method and one that cannot work regardless of how good the entries are.
This is why "the spread is only 1.2 pips" is a meaningless statement on its own, and why scalping strategies that backtest beautifully on mid prices fall apart in an account.
What it does to the win rate you need
Every 0.1R of cost raises the break-even win rate. On a 1:2 setup the threshold moves from 33.3% to about 36.7% at 0.1R, and to roughly 40% at 0.2R.
Six or seven percentage points of win rate is not a rounding error — it is usually the whole edge. The break-even win rate calculator works the exact threshold out for any ratio and cost.
What is not counted here
Slippage, which is separate from the spread and often larger during news. The spread is the quoted cost; slippage is what you actually paid beyond it.
Swap, on anything held overnight — a cost that grows with time rather than with activity, covered on the swap calculator.
Widening. The spread you are quoting is presumably the typical one. It widens around releases, at the session rollover and in thin liquidity, which is precisely when many strategies want to trade.