forex-scalping.com

Several platforms show a live spread, but many traders end up using the average spread stats that brokers publish on their websites. Those are monthly or daily averages, taken from quote streams, usually during peak hours, and they almost never reflect what was actually paid per trade.

There are a few reasons. The average may exclude rollover and news windows. It may use a different server than the one the account sits on. It may be the median, which hides spikes completely.

Meanwhile, the trade ticket records an open price and a close price. Subtract them from the mid-market equivalent and the real spread paid is visible. Over a hundred trades that number can be higher than the website claims, especially for strategies that trade at times when quotes are poor.

The cleanest comparison is one number: total cost in pips per round trip, derived from actual fills, versus the number on the marketing page. For retail scalping the gap can be 30 to 50 percent.

It's not always dishonest. The two figures just measure different things. But only one of them hits the account balance.

There are at least four different numbers floating around, and they get mixed up:

- the average spread over a month, as advertised
- the median spread, which hides spikes and is usually lower
- the spread at the moment of each order, which is the one that counts
- the maximum spread, which shows how bad the worst moments get

A scalper's real cost sits closest to the third. It can be reconstructed by subtracting the bid at order time from the ask, using logged quotes or tick data around each trade.

A tidy way to summarize is a histogram of the spread at entry across all trades. If the distribution has a long right tail, the average is misleading. A few trades at 4 or 5 pips pull the real cost per trade well above the advertised mean, and they often cluster at rollover and news, exactly the times a strategy might be most active.

What did the real cost per round trip look like when it was last calculated from fills?

I worked this out for the first time about eight months ago and the result was humbling. The broker's page quoted an average of 0.7 on EURUSD, and when I went through roughly three hundred of my own fills with the tick history next to them, the real figure at the moment of entry came to just over 1.1 including the commission converted to pips.

Your histogram suggestion is the one that showed me why. Most of my entries were close to the advertised number, but there was a stubborn cluster between two and four pips, and nearly every one of those trades had been taken in the first minute after a release or in the hour after the New York close. Those few trades were dragging the whole average up.

So I stopped looking at the marketing page altogether. Once a month I recalculate the cost per round trip from my own trade history, and if it creeps up I look at what time of day the expensive entries came from before blaming the broker.