Position Size After Spread and Commission: What Your Risk Budget Buys

The size, with both costs taken out first

A risk budget is money you have decided to lose if the stop is hit. The spread and the commission are also money you lose on that same trade, and neither one appears in the plain formula. Put them in and the size drops.

Two changes against the version most people carry in their head: the spread is added to the distance the price has to travel, and the commission is removed from the budget before anything is divided. On a 10,000 USD account risking 1%, a 20-pip stop on EUR/USD with a 1-pip spread and 7.00 USD of commission, the difference is this:

The size falls by 6,000 units. The trade that ignores costs loses 112.00 USD against a 100.00 budget — every stop-out is 12% larger than the one that was planned.

Why the two costs go in different places

They behave differently, so they are entered differently.

• The spread is distance. You buy at the ask and the bid is where a long position is marked. From the moment the order fills, the position is one spread below the price you clicked. That gap is travelled before the stop does any work, so it is added to the stop distance: a 20-pip stop with a 1-pip spread is a 21-pip stop in money terms.
• The commission is money out of the budget. It does not depend on where price goes. Whether the stop is hit or the target is hit, it is paid, so it is subtracted from the budget before the division. A 7.00 USD round-turn fee on a 100.00 USD budget leaves 93.00 USD available to be risked on price.

One consequence is worth stating plainly: a cost-aware size is always smaller or equal, never larger. Both costs pull in the same direction. There is no configuration where including them gives you more units.

What one pip costs at each lot size

The arithmetic is easier to check with the per-lot figures in front of you. This table is the site's own reference data, in USD, for a pair quoted in USD and for a JPY pair at 150.00:

Read the 0.44-lot trade above straight off the standard row: 20 pips costs 200.00 USD per lot, so 0.44 lots costs 88.00 USD; one pip of spread costs 10.0000 USD per lot, so 0.44 lots costs 4.40 USD. Add the 7.00 USD commission and you have the 99.40 USD in the first table.

The JPY column is the same idea at a different quote. One pip on USD/JPY is 0.01 of price, so 100,000 units move 1,000 JPY per pip, which is 6.6667 USD at 150.00. The column is rounded to four decimals, so totals built from it land within a cent of the exact figure.

Worked example: EUR/USD, 100.00 USD budget

Account 10,000 USD, risk 1%. Entry 1.1000, stop 1.0980, so the stop distance is 0.0020 — 20 pips. Spread 1 pip. Commission 7.00 USD round turn. Account currency USD, quote currency USD, so no conversion is needed.

1. Budget: 10,000 × 1% = 100.00 USD.
2. Budget after commission: 100.00 − 7.00 = 93.00 USD.
3. Effective stop distance: 0.0020 + 0.0001 = 0.0021.
4. Units: 93.00 ÷ 0.0021 = 44,285.71, rounded down to a 1,000-unit step = 44,000 units, which is 0.44 lots.
5. Check the worst case from the rounded number: 44,000 × 0.0021 = 92.40 USD, plus 7.00 USD commission = 99.40 USD. Inside the 100.00 budget.

The version that ignores costs stops at 100.00 ÷ 0.0020 = 50,000 units. Those 50,000 units lose 100.00 USD on the price move, 5.00 USD on the spread and 7.00 USD in commission: 112.00 USD. The trader believes they risked 1% and actually risked 1.12%.

Worked example with a JPY quote: USD/JPY at 150.00

Account 5,000 USD, risk 1%, so the budget is 50.00 USD. Entry 150.00, stop 149.60 — a distance of 0.40, which is 40 pips at the 0.01 pip size JPY pairs use. Spread 1 pip. Commission 5.00 USD. The account is in USD and the quote currency is JPY, so every JPY figure has to be divided by 150.00.

1. Budget after commission: 50.00 − 5.00 = 45.00 USD.
2. Effective stop distance: 0.40 + 0.01 = 0.41 JPY, which is 0.41 ÷ 150.00 = 0.00273333 USD per unit.
3. Units: 45.00 ÷ 0.00273333 = 16,463.41, rounded down = 16,000 units, or 0.16 lots.
4. Worst case: 16,000 × 0.41 = 6,560 JPY = 43.73 USD, plus 5.00 USD commission = 48.73 USD. Inside the 50.00 budget.

Cross-check against the reference table: 40 pips at 6.6667 USD per pip per lot is 266.67 USD per lot, and 0.16 lots of that is 42.67 USD; one pip of spread on the same size is 1.07 USD. Together 43.74 USD, a cent from the exact 43.73 USD because the per-pip figure in the file is rounded.

Ignore the costs and the same budget gives 18,000 units, which loses 48.00 USD on the move, 1.20 USD on the spread and 5.00 USD in fees: 54.20 USD. On a 5,000 USD account that is 1.08% of the balance against a 1% plan.

The same budget across four commission levels

Commission is the cost you can shop for, so it is worth seeing how much of the size it takes. Same account, same pair, same 20-pip stop and 1-pip spread: 10,000 USD, 1%, 100.00 USD budget.

Doubling the commission from 7.00 to 14.00 USD costs 4,000 units, about 9% of the position. The worst-case column wobbles rather than falling in a straight line because each row is rounded down to the step — the size gives up whatever fraction of a step it cannot use.

The same budget across three spread quotes

Now hold the commission at 7.00 USD and let the quoted spread move. This is what happens between a quiet session and a busy one on the same setup.

Tripling the spread costs 4,000 units here — the same order of damage as doubling the commission, because on this trade the two costs are of comparable size. The worst case stays inside the budget in every row, which is the point of the method: the size absorbs the cost instead of the account.

Which of the two costs is the bigger one at your size

The spread scales with the position and the commission does not. That single difference tells you which one to negotiate.

On the EUR/USD example the spread costs 10.0000 USD per pip per standard lot and the commission is 7.00 USD regardless of size. One pip of spread equals the commission when the position is 7.00 ÷ 0.0001 = 70,000 units. Below that, the commission is the larger of the two; above it, the spread is. A trader running 0.20 lots on a 20-pip stop is paying more in commission than in spread. A trader running 2.00 lots on the same stop is paying far more in spread.

It also explains why cost-aware sizing bites hardest on the two extremes: small accounts, where a fixed fee is a large share of a small budget, and wide stops, where an extra pip of spread is a small share of a long distance but still real money.

Margin is a separate constraint that applies after this one, and it is covered in the leverage and margin guide. What the costs do to the closed trade, on the profit side rather than the sizing side, is what the forex profit calculator prints.

Fill the ticket in this order

• Read the spread off the quote panel in pips, not as a price, and type it into the size calculation before you look at the size.
• Enter the commission as a round-turn amount in your account currency. If your broker quotes it per side, double it; if it is a percentage of notional, work it out at the size you expect, then recheck once the size is fixed.
• Convert the stop distance into your account currency before dividing, including the spread, then divide the budget minus the commission by it.
• Round down to the step, then recompute the worst case from the rounded number so you can see it fits rather than assume it.
• Keep both numbers — with and without costs — for a week. The gap between them is what your execution actually costs you per trade.

When the quote widens after you have already sized

A size computed at 1 pip is wrong the moment the quote is 3 pips, and the fix is not to place it anyway and hope. Re-run the two numbers: at 3 pips the same trade is 40,000 units. If you already hold 44,000, the excess is not a rounding detail — it is 4,000 units of risk that was never budgeted.

Two habits keep this from becoming a recurring leak. Size from the spread you actually see at the moment of the click, not the typical one from the broker's marketing page. And when the widening is temporary — around data releases and the rollover window — a limit order resting at your price removes the spread question entirely, at the cost of possibly not being filled. An unfilled order costs nothing; an oversized one costs the difference every time the stop is hit.

Open the position size calculator

Related guides

• How to calculate position size in forex — the four inputs and the single-entry version of the same formula.
• Pip calculator — what a pip is worth at each lot size, in your own account currency.
• Lot sizes explained — standard, mini, micro and nano, and how many units each one is.
• Position size by instrument — contract size, pip size and unit step for all 131 symbols.
• Position sizing on a small account — when the fixed fee and the minimum step fight the budget.