How trading costs affect grid algorithms
A grid algorithm makes many trades with a small target each. The smaller the target, the larger the share of it that costs eat.
Worked example (illustration)
Take a 0.10-lot EUR/USD trade with a +10-pip target. One pip on 0.10 lot ≈ $1, so the gross target ≈ $10.
| Account type | Spread | Round-turn commission (0.10 lot) | Costs | Share of the $10 target |
|---|---|---|---|---|
| Raw spread + $3.50 per side | 0.2 pip = $0.20 | $0.70 | $0.90 | 9% |
| Raw spread + $2.25 per side | 0.2 pip = $0.20 | $0.45 | $0.65 | 6.5% |
| Standard, 1.0-pip mark-up | 1.0 pip = $1.00 | $0 | $1.00 | 10% |
| Standard, 1.6 pips | 1.6 pips = $1.60 | $0 | $1.60 | 16% |
The 0.2-pip average spread is an assumption for the example; the real one depends on the broker, the time of day and the news.
Why it is critical for a grid
- Trade count: a grid closes many partial cycles — costs multiply by their number.
- Swap: a basket can be held for days; a negative swap on every position accumulates, and on the triple-swap day three days are charged.
- Spread widening around news and at the daily rollover can open grid levels at worse prices.
- Slippage in a fast market increases the actual level distance.
Practical conclusions
- Measure costs as a percentage of one cycle's target, not in pips.
- Check the swap in both directions before going live.
- Test on real ticks with the real spread, not a fixed one.
- Compare brokers by full round-turn cost (see the conditions comparison).
The materials are for information only and are not investment advice. Leveraged trading carries a high risk of losing money.
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