Converting commissions to pips,I am doing this calculations right?

Beginner Questions
1

Hi everyone,

Since I’m a scalper the spreads and the commissions are very important to me, to make the process of choosing a good ecn brooker I converted the commissions into pips (of course I also taking other factors in, like slippage, problems with users, etc…)

For converting the the commissions I did this calculations:

  1. See who much the broker was charging for one million.

  2. Multiply that value by two to get the value for the opening and closing the trade.

3.See how much is the pip in one million.

4.With using the value of the pip per million I convert the price of the commission into pips.

Example

  1. The broker charges me 20.5€ per million

2.Multiply 20.5 by 2 ( 20.5€ charged when opening a trade and 20.5€ for closing the trade) 20.5*2=41€

3.The price of the pip in one million 82€

  1. So if one pip costs 82€ then 41€ of commission represents 0.5 pips.

I used very simple values in this example to facilitate the math, but in the 4 steps with more complicated number I would use cross multiplication to obtain that value.

Is my calculations correct or I’m missing something?

Thank you in advance.

2

yup, got it pretty well bang on. mine’s (nearly, if not precisely) the same. about .3pip per trade so .6pip round-trip for the commissions.

3

Whats your broker?

4

dukascopy (extra characters to hit 10char msg limit, argh)

5

I recived an email this morning saying that the commisson of dukascopy changed from 35$ to 10$ a one miilion dollars trade.

Did you also get that email?

6

yup, i got an email a few days ago as well that it dropped a bit for me too. kinda nice :slight_smile: didn’t pay attention to the exact level, just noticed that it was less - and the overall “cost to trade” (spread + commission) was pretty good to begin with anyways.

7

I dont think its the same email. Because a few days (29 june) I recieved one that they reduced the commissions from 48 to 35 to day 15 days after I recived another email saying that they reduce the commissions from 35 to 10.

I think its bit odd that they lower their commissions two times in such a short time. Maybe it was a glitch in the system. :slight_smile:

8

Commission usually varies with each and every broker, its not decided by the inter-banks like that of spreads where the market maker broker adds on top their own mark-up; hence their profit margin. Also commission can be negotiated by the trader with the broker from time to time, and is very much directly linked with the volume of lots that you trade per month. As a rule of thumb, the more lots you trade, the less commission you will pay lot for lot, but not in total.

Unless your trading a minimum of about 10 lots per trade, which is a notional value of $1,000,000 (when considering USD as the cross in your pair), then you should not be worrying about fluctuating commission charges.

9

Nice thread. The exact calculus for this question : Commission to Pips, including the spread as well.

double TakeProfit = StopLoss + (double)((Symbol.Spread) / (double)Symbol.PipSize) + ((commission * 2 * volume * Symbol.PipValue));

StopLoss and TakeProfit are in pips, the spread is not. I use this to make sure that TP and SL are in balance.