How to use the trade round trip cost calculator
- Enter the number of shares you plan to buy and sell.
- Enter the bid and ask prices.
- Enter the commission for one side of the trade and any slippage per share.
- Read the total cost of the round trip and the price move needed to break even.
Formula
Spread cost = (ask - bid) x shares
Commissions = commission per side x 2
Slippage = slippage per share x shares x 2
Break-even move = total cost / shares
You buy at the ask and sell at the bid, so you give up the spread at once.
100 shares with a 10 cent spread
With a bid of $99.95, an ask of $100.05 and a $1 commission each way, the spread costs $10.00 and commissions $2.00. The round trip costs $12.00, which is 0.120% of the $10,005.00 position. The price must rise $0.12 a share, from $100.05 to $100.17, to break even.
A wider spread of a dollar ($99.50 and $100.50) raises the cost to $102.00. Slippage of 2 cents a share on each side adds $4.00 and makes it $16.00. An order of 10 shares costs $3.00.
The hidden cost of trading
Commissions are visible, but the spread is not on any statement. Anyone who buys and sells at once pays the difference between the price buyers offer and the price sellers ask. For a heavily traded stock it may be a cent, and for a thinly traded one many times that. Slippage is the extra cost when an order fills at a worse price than the quote, which is common in fast markets or with large orders.
These costs matter most to people who trade often. A cost of 0.12% on every round trip is a hurdle that your trades must clear before they make money.
What the page cannot know
Quotes change from second to second, and large orders move the price. The page does arithmetic on the figures you enter and gives no advice. The Position Size Calculator sets how much to buy, the Trade Journal Expectancy Analyzer looks at the results of past trades, the Margin Loan Interest Cost Calculator adds the cost of borrowing, and the Investment Fee Calculator shows what yearly fund fees cost.
Assumptions and limits
- The buy fills at the ask price and the sell at the bid price, both as quoted.
- The commission is the same on each side and is charged once per side.
- The figures shown are examples. Use your own quotes and fees.
- Taxes, financing costs and exchange fees are not included.
Frequently asked questions
Why does the break-even price differ from my purchase price?
Because you sell at the lower bid price, so the price must rise by the whole cost per share before the trade is level.
Is slippage per side or in total?
It is per share on each side, so the tool counts it twice, once for the buy and once for the sell.
Can the ask be below the bid?
No. That would be a crossed quote. The tool refuses it and asks you to check the prices.
Does it work for short sales?
The arithmetic is the same, with the sale first and the purchase later, but borrowing fees and rules for short sales are not included.