Do i then need to multiply it by 1000, 10,000 or 100,000 depending on the number of units in the lot?
If I understand your question, you are referring to the spread as a cost which must be recouped before your trade can show a net profit, and you are asking what that cost is – in dollar terms – for various size positions.
One pip is worth 0.10 USD per micro-lot (1,000 units), or 1 USD per mini-lot (10,000 units), or 10 USD per standard lot (100,000 units).
I will assume the spread is 0.6 pips, as you stated in your post.
• If your account currency is not USD, then the pip-values we used above will have to be converted into your account currency. So, for example, if your account currency is AUD, then we get pip-values in AUD by dividing the USD pip-values by the current price of AUD/USD.
or 14.117 AUD per standard lot.
These results can be calculated using the PIP VALUE CALCULATOR, as well.
dollar-cost = 0.0847 AUD per micro-lot = 0.847 AUD per mini-lot = 8.47 AUD per standard lot.
apply the same for any currency pair where spread for one lot is 0.0001*nominal amount of base currency.
if you need to calculate smaller lots simply multiply spread by the fraction of lot you took as an input.
Thanks @ontario and @Clint I understand now. I think i i understood it correctly to begin with but CMC Markets used different terminology when i called them.
if the cost is $7 for round trip? or should i be adding $3.50 for one side?
Your completed trade (meaning from entry to exit) will cost you the spread (which we have discussed) plus a round-turn commission.
So, think in terms of the round-turn commission, and ignore the “half-commission” for “one side”.
for one standard lot $13.
Yup your calculations look legit. Don’t be misguided with micro lots account and other BS. Leverage, absolute nominal lot amount and the name of the base currency are the only parameters needed to calculate spread, remember that.