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Glossary · Pro tools

Trading costs

What each buy or sell costs you, mostly the gap between the bid and ask prices.

Why it matters

Commissions are mostly gone, but you still pay the spread and some price impact. Rules that trade often lose more of their return to these costs.

How to read it

The strategy tester takes 0.05% off every buy and every sell, typical for large US stocks. Small stocks cost more.

Also called: spread, slippage

Related

BacktestTesting a trading rule on past prices to see how it would have done.LiquidityHow easily you can trade without moving the price, shown by tight bid and ask prices and real volume.

In the Cluenex app, this explanation opens next to every trading costs figure, with the live reading for the stock you are looking at. Open it in Cluenex