I keep seeing people mention calculating true trading cost but nobody actually breaks down the formula in a way that makes sense to me. I understand spread and commission as separate things, but once you throw rebates into it I get lost on the order of operations.
Like, do you subtract the rebate first and then calculate, or do you add everything up and subtract at the end? Does the rebate apply to the spread, the commission, or both? And is it per trade or monthly?
I want to build a system that makes this transparent so I can actually see what each trade costs me. Can someone walk through a real example step by step so I can understand how this actually works?
Spread plus commission minus rebate per lot equals cost.
One pip spread point five per lot rebate point three five.
Here’s the formula: true cost per lot = (spread in pips × pip value) + commission - rebate.
Example: EUR/USD at 1.2 pips spread, trading 1 lot. One pip equals ten dollars. Commission is two dollars. GlobeGain rebate is 0.4 pips (four dollars). Math: (1.2 × 10) + 2 - 4 = 12 + 2 - 4 = 10 dollars true cost per lot.
The rebate applies to both spread and commission combined. It’s calculated and credited monthly, but you can project it per trade using the average rebate rate from your broker. Track this for every pair on your broker and you’ll see where your actual trading costs are concentrated.
I keep a simple log: instrument, spread in pips, commission, rebate rate, then one formula that adds the first two and subtracts the third. Do this for every trade and at the end of the month you see your total actual cost versus what you thought you were paying.
The rebate comes through separately a few days later but I log it when it arrives so I can match it to my trades.
Spread plus commission minus rebate. That’s the whole thing.
I spent months getting this right before I found the simple version. The key insight is that spread and commission are both costs and the rebate covers both.
So you add your spread cost (in dollars) plus your commission, then subtract your rebate. The rebates are usually quoted in pips but your broker converts them to dollars, so just use the dollar amounts GlobeGain sends you.
I track entry spread, exit spread separately since sometimes they’re different. Most people ignore that detail but on volatile pairs it adds up. After about fifty trades you have real data on your average cost per pair and can start making decisions based on actual numbers not assumptions.