POC
📉 TOOL · Is my edge real?

The cost of trading

Costs don't matter in the abstract — they matter compared to what each trade actually makes. A £10 cost is nothing on a trade that nets £200, and fatal on one that nets £12. Set your typical trade and see how big a bite friction really takes.

How it works
1 You describe your typical tradeWhat an average trade makes before costs, what it costs you, and how often you trade.
2 We compare the two, per tradeThe whole tool turns on one ratio: your cost per trade against your profit per trade. That is what decides whether a cost is trivial or fatal.
3 We scale it over your trading lifeThe same ratio, repeated across every trade you would place in the period you set.

Two things to get right before reading any number.

1. “You make, before costs” is the average across ALL your trades — winners and losers together, not what a winning trade makes. If ten trades win £100 and ten lose £80, that figure is £10, not £100. It is your edge per trade, the same idea Real or Noise? measures in R. Enter your winners here by mistake and every number below will be far too flattering.

2. “Friction” is everything a trade costs you — spread, commission, slippage and any overnight financing, added together for the full round trip in and out.

What this can’t tell you

The arithmetic here is deliberately simple. That makes the lesson clear, and it makes these limits real.

  • It is not a forecast of what you will have. It multiplies one average trade by how many trades you place. A real account arrives at its total through winning and losing streaks, not in a straight line.
  • It assumes your edge and your costs stay the same for the whole period. Over five years, neither usually does — edges decay, and costs move with size, speed and market conditions.
  • It cannot tell you whether your edge is real. It takes the profit-per-trade you typed at face value. Testing whether that figure is skill or luck is what Real or Noise? is for — run it there first, because costs applied to an imaginary edge just tell you how fast an imaginary profit disappears.
  • Slippage is the part people underestimate. Spread and commission are quoted to you; slippage is not, and it grows with position size, speed and thin markets. If you are guessing at the cost figure, you are probably guessing low.
  • Nothing here compounds. This is a plain per-trade view. On a real account the gap widens further over time, because money paid in costs never gets the chance to grow.
  • Tax, data fees and platform charges are not included — nor is the cost of your own time.
The thinking behind it
08
Costs are the quiet tax
READ →
10
Trading less is often the cheapest edge
READ →
Next

If the edge still clears its costs, size is what decides whether you are around to collect it. How much can you risk per trade without a bad run ending you?

Size & Survive →