Scalping: why costs decide the outcome

Open any EUR/USD chart and you see two prices at the right edge, not one. The lower figure is the price at which you can sell, and the higher figure is the price at which you can buy. The distance between them is the spread. On a chart around 1.0850 the two numbers might read 1.08494 and 1.08506, a gap of 0.00012, which is 1.2 pips.

That gap is drawn before you arrive and it does not wait for you to decide. The moment you buy, your position starts 1.2 pips below the buy price, because selling it back immediately would fetch the lower figure. The chart has not moved, yet the trade is already behind. This is the first cost, and it is visible if you look at both prices rather than only the last one.

Scalping compresses this into a small space. A target of 3 pips sits close to a spread of 1.2 pips, so a large share of the distance you are trying to cover is already gone at entry. The chart shows the movement you hope for. The two prices at the edge show what that movement has to overcome first.

A pip is a fixed step in price, but its money value depends on three things: the pair, the size of the position, and the exchange rate used to convert the quote currency into pesos. For EUR/USD the quote currency is the US dollar. One pip on one standard lot is 10 US dollars, and converting that at the current rate gives roughly ₱580. That conversion rate moves, so the peso figure is an estimate, not a constant.

Position size scales the figure in a straight line. A mini lot is one tenth of a standard lot, so one pip is about ₱58. A micro lot is one hundredth, so one pip is about ₱5.80. The arithmetic of the trade does not change with size, but the money at stake does, and so does the cost of the spread measured in pesos.

Because the conversion rate varies, two people trading the same pair with the same size can see slightly different peso values on the same day. The pip count is the stable part. Convert it to pesos only after you have the pip count, and treat the peso result as an approximation that depends on the rate at the time.

Some accounts charge no separate commission and build the cost into a wider spread. Others quote a narrower spread and add a commission per lot per side. Both models exist, and the total cost is what matters, not which label the broker uses. The chart shows the spread. It does not show the commission, so a narrow spread can still be the more expensive choice.

Commission is usually charged when the position opens and again when it closes. That means a round trip carries two charges. If a commission is quoted per lot per side, a one standard lot round trip is charged twice. The effect on a 3 pip target is direct: the commission reduces the net result in the same way the spread does.

The practical consequence is that a scalping target has to clear the spread plus the commission, not the spread alone. A target that looks profitable against the spread can be a loss once the commission is counted. The figures vary between brokers, so read the contract specifications for the account you are considering and use those numbers in your own arithmetic.

Take the target in pips, subtract the spread in pips, and subtract the commission converted into pips. What remains is the amount the price must move in your favour before the trade breaks even and then profits. If the target is 3 pips, the spread is 1.2 pips, and the commission equals 0.4 pips, the net is 1.4 pips. The trade is only worth taking if the chart can plausibly deliver that movement.

Multiply the net pips by the pip value to get the money result. On one standard lot at about ₱580 per pip, 1.4 net pips is about ₱812 per trade before any other costs. Over 20 trades the net pip count is 28, and the money result is about ₱16,240. The spread alone over those 20 trades costs 24 pips, or about ₱13,920.

These numbers are the whole lesson. The technique of choosing entries matters, but it operates on a smaller remainder than most beginners assume. If the costs are large relative to the target, no entry method fixes the arithmetic. If the costs are small relative to the target, the technique has room to work.