Commission as a percentage of R
Posted: Fri Oct 30, 2026 5:59 am
A quick way to see what costs do to a scalping edge is to express them as a fraction of risk. Suppose the stop is 4 pips, and round-trip cost is 0.8 pip. The cost is 20 percent of R. Every trade starts 0.2R in the hole.
That changes the required win rate. With a 1:1 reward to risk and no costs, break-even is fifty percent. With costs at 0.2R, break-even moves to roughly 60 percent. A trader who wins fifty-five percent is losing money despite a decent hit rate.
Tighter stops make it worse. A 2 pip stop with the same 0.8 pip cost puts the burden at 40 percent of R, requiring a win rate near 70 percent at 1:1. That's why very tight scalping is so difficult for retail traders.
Wider stops dilute the cost but require larger targets, and the setups become different. The tradeoff is built into the structure of the business.
What does the cost to R ratio look like on current trades, and what does that imply for required win rate?
That changes the required win rate. With a 1:1 reward to risk and no costs, break-even is fifty percent. With costs at 0.2R, break-even moves to roughly 60 percent. A trader who wins fifty-five percent is losing money despite a decent hit rate.
Tighter stops make it worse. A 2 pip stop with the same 0.8 pip cost puts the burden at 40 percent of R, requiring a win rate near 70 percent at 1:1. That's why very tight scalping is so difficult for retail traders.
Wider stops dilute the cost but require larger targets, and the setups become different. The tradeoff is built into the structure of the business.
What does the cost to R ratio look like on current trades, and what does that imply for required win rate?