Scalping and Spread Costs: The Minimum Target Rule

[FXS Prop Desk]

A simple rule keeps scalping strategies honest: the average target should be at least four to five times the total cost per trade.

Calculating the cost:

• Average spread during your session, in pips.
• Commission per round turn converted to pips (e.g. $7 per lot on EURUSD ≈ 0.7 pips).
• Average slippage on entries and stops.

Example: 0.2 spread + 0.7 commission + 0.1 slippage = 1.0 pip. A 3-pip target gives a third of the move to costs; a 5-pip target gives a fifth.

What to do if your targets are below the threshold:

• Move to a lower-cost account or broker.
• Trade only the hours with the tightest spreads.
• Use limit entries to avoid paying the spread on entry.
• Step up one timeframe to get larger targets.

What is the ratio of your average target to your total cost per trade?

[Shadow Trader]

My working ratio is closer to six times cost than four. With 0.2 spread, 0.6 commission and 0.2 average slip, I need about 6 pips of average winner before I call the setup scalpable on EURUSD during London.

A 3 pip target failed that test even when the win rate looked fine on a gross log. After costs the expectancy sat near zero across a 250 trade block, so I either stepped to M5 targets or skipped the hour.

Limit entries helped on the entry side but did nothing for stop slip, which is where most of my cost budget went on fast tapes. Widening the stop without widening the target just made the ratio worse.

I also cut pairs whose London open spread alone already eats a third of the planned target. That filter removed GBPJPY from my morning list.

What ratio do you actually require before a pair stays on the card? I recompute it whenever commission tiers change.