When your profit target is only 20 pips, trading costs aren't a rounding error — they're a major part of the equation. Two costs decide whether a 20-pip strategy survives: spread and slippage.
Spread: the price of entry
The spread is the gap between the bid and ask. You enter at the worse side, so you start every trade slightly underwater. On a 20-pip target:
- a 0.5-pip spread costs ~2.5% of your gross reward;
- a 2-pip spread costs 10%;
- a 3-pip spread costs 15% before the trade even moves.
That cost compounds across hundreds of trades. It's the difference between a profitable system and a slow bleed.
Slippage: the price of reality
Slippage is when your order fills at a different price than expected — common during fast moves or thin liquidity. It widens your effective spread unpredictably and hits short-target trades hardest.
How costs raise your break-even win rate
The raw risk-to-reward math puts break-even around a 43% win rate. Add a couple of pips of spread plus occasional slippage and that break-even climbs toward 46–50%. In other words, costs quietly demand a higher win rate just to stand still.
How to minimize the damage
- Use an ECN/raw-spread account with transparent commission — usually cheaper overall for scalping than "commission-free" markups. See the broker guide.
- Trade liquid sessions when spreads are tightest.
- Avoid high-impact news, when spreads blow out and slippage spikes.
- Add a spread filter. Skip any trade when the spread is wider than a threshold — our bot does this before even evaluating a setup, so a blown-out spread costs you nothing.
- Use a low-latency VPS near your broker to reduce slippage.
Bottom line
You can't eliminate spread and slippage, but you can keep them small — and on a 20-pip strategy, "small costs" is half the battle. Measure real spreads during a demo run before going live, and remember: even with perfect costs, results are never guaranteed.