Calculating cost by lots / units

Broker Discussion
1

As I understand it
If i wanted to calculate the cost for a mini lot for AUSUSD would be 0.10 x the spread (in the case of axitrader it would be 0.6)

Similarly if i wanted to calc cost for Micro lot for AUDUSD it would be 1 x Spread and 10 x Spread for standard lot

Do i then need to multiply it by 1000, 10,000 or 100,000 depending on the number of units in the lot?

I’m trying to understand how it works with CMC markets…As im understanding it i simply multiple the number of units x the spread…

Am i not understanding something?

2

If I understand your question, you are referring to the spread as a cost which must be recouped before your trade can show a net profit, and you are asking what that cost is – in dollar terms – for various size positions.

One pip is worth 0.10 USD per micro-lot (1,000 units), or 1 USD per mini-lot (10,000 units), or 10 USD per standard lot (100,000 units).

I will assume the spread is 0.6 pips, as you stated in your post.

• If your account currency is USD, then we can calculate the dollar-cost you are asking for, as follows:

  • dollar-cost per micro-lot = 0.10 USD/pip x 0.6 pip = 0.06 USD

  • dollar-cost per mini-lot = 1 USD/pip x 0.6 pip = 0.60 USD

  • dollar-cost per standard lot = 10 USD/pip x 0.6 pip = 6 USD

• If your account currency is not USD, then the pip-values we used above will have to be converted into your account currency. So, for example, if your account currency is AUD, then we get pip-values in AUD by dividing the USD pip-values by the current price of AUD/USD.

Let’s say the current price of AUD/USD is 0.70836

Then, one pip is worth 0.10 USD / 0.70836 = 0.14117 AUD per micro-lot, or 1.4117 AUD per mini-lot,
or 14.117 AUD per standard lot.

These results can be calculated using the PIP VALUE CALCULATOR, as well.

Finally, as we did above, we multiply these AUD pip-values by the spread (0.6 pips) and get:

  • dollar-cost = 0.0847 AUD per micro-lot = 0.847 AUD per mini-lot = 8.47 AUD per standard lot.
3

1 lot of EURUSD - 100000 EUR spread: 0.0001100000 = 10 euro
1 lot of USDJPY - 100000 USD, spread: 0.0001100000 = 10 bucks

apply the same for any currency pair where spread for one lot is 0.0001*nominal amount of base currency.

if you need to calculate smaller lots simply multiply spread by the fraction of lot you took as an input.

4

Thanks @ontario and @Clint I understand now. I think i i understood it correctly to begin with but CMC Markets used different terminology when i called them.

One last question - so with the AxiTrader example
dollar-cost per micro-lot = 0.10 USD/pip x 0.6 pip = 0.06 USD
dollar-cost per mini-lot = 1 USD/pip x 0.6 pip = 0.60 USD
dollar-cost per standard lot = 10 USD/pip x 0.6 pip = 6 USD

To include commission i simply add $0.07, $0.70, $7 to the $0.06, $0.60, $6
if the cost is $7 for round trip? or should i be adding $3.50 for one side?

5

Your completed trade (meaning from entry to exit) will cost you the spread (which we have discussed) plus a round-turn commission.

So, think in terms of the round-turn commission, and ignore the “half-commission” for “one side”.

In the examples we have been discussing, the spread cost plus commission would be:

  • for one micro-lot $0.13
  • for one mini-lot $1.30 and
  • for one standard lot $13.
6

Yup your calculations look legit. Don’t be misguided with micro lots account and other BS. Leverage, absolute nominal lot amount and the name of the base currency are the only parameters needed to calculate spread, remember that.