Why is broker cost so important?

custom-forex-robot-programmerMost of the traders don’t understand why is it so important to choose a broker with low spreads, low commissions, low swaps, and low slippage. A very common misbilef is that broker cost is important ONLY for scalpers.
Now we will show you, how much does it influence the profit of a daytrader:

Let's suppose you have the following trading system:
You trade with a strategy, using 200 point TakeProfit and 160 point Stoploss, while your average winning ratio is 50%. Your broker provides you a 20 points spread.
In this case the spread is just 10% of your original TP, what is not a too big number.

You have 50% winning ratio, that means you win half of the trades while you lose the other half of them. Let’s say you win 200 points with your first position but you lose 160 points with you second one.
In total you win only 200 – 160 = 40 points. But you opened two position, therefore you win only 40 / 2 = 20 points on each position.

And how much did the broker earn?

Exactly the same, because the slippage was 20 points!
If you are able to decrease your broker cost with 50% percent, then you can increase significantly you profit without changing anything on your strategy!

In this example we do mentioned only spread, but comission, slippage and swap can influence your profit as well.

Anyway Forex Broker Stars Aggregate Report shows you all the important results!


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