Round-Trip Cost

Round-trip cost is the full cost of completing a trade — from the moment you enter a position to the moment you exit it. It is called a round trip because a complete trade involves two legs: the entry and the exit. Each leg carries its own costs, and the round-trip cost is their sum. The components of round-trip cost typically include exchange fees on both the entry and exit transactions, the spread on each side — paid when crossing from bid to ask on entry and from ask to bid on exit — and any slippage incurred if the executed price differs from the expected price on either leg. In derivatives or margin trading, additional costs such as funding rates or borrowing fees may also apply and should be included in the full calculation. Understanding round-trip cost matters because profit calculations are only meaningful when measured against the true total cost of the trade, not just one side of it. A trade may appear to generate a small gain on paper when looking only at entry and exit prices, but once round-trip costs are deducted, the net result may be a loss. This is particularly relevant for short-term traders and scalpers who rely on capturing small price movements — if the round-trip cost exceeds the targeted price gain, the trade is unprofitable by design before it is even placed. Round-trip cost also establishes the minimum price movement required for a trade to break even. For example, if entry and exit costs combined equal 0.2 percent of the position value, the asset must move at least 0.2 percent in the intended direction before any profit is realised. Calculating this breakeven threshold in advance is a foundational element of disciplined trade planning and position sizing.