What you will learn
- Bid-ask spread
- Commissions and exchange fees
- Financing and swaps
- Currency conversion charges
Bid-ask spread
The bid is a quoted buying price and the ask a quoted selling price from the market or provider's perspective. Crossing from buying at ask to selling at bid creates an immediate cost if the quote is otherwise unchanged. Available size and execution terms still matter.
Commissions and exchange fees
Commissions and exchange-related charges may apply at entry and exit. Record whether a charge is per unit, per order or percentage-based. Minimum fees can make a small order's proportional cost much larger than a large order's proportional cost.
Financing and swaps
Financing reflects the funding arrangement of the instrument and account. A charge can depend on direction, date and notional amount. Do not assume that every gold product has an identical overnight cost or that an advertised rate stays constant.
Currency conversion charges
Conversion charges arise when amounts move between currencies. Separate the exchange-rate effect from an explicit conversion fee, and retain the conversion rate used. Otherwise a price-only journal may not reconcile with account-currency results.
Worked example
A hypothetical buy fills at 100.20 and the immediate sell fills at 100.00, with multiplier ten. The price loss is 2 per contract. If commission is 1 per side, net loss is 4; do not subtract the 2 spread cost a second time.
Try it yourself
Calculate the same round trip for three contracts, assuming all charges scale linearly and there is no financing or conversion charge.
Show the worked solution
The fill-price loss is 6 and the two-sided commission is 6, giving a net loss of 12. The assumptions exclude minimum fees and nonlinear execution effects; those must be added if applicable.
Apply this to your course project
Compare two hypothetical trade statements and explain their different net outcomes.
Keep the calculation inputs, assumptions and decisions with your work. Practical exercises are self-reviewed; the scored knowledge checks assess the questions shown, not an independent certification of practical competence.