In algorithmic gold trading, many traders focus heavily on strategy logic, signals, and backtest results while overlooking transaction costs. These costs are often treated as minor or fixed, but in reality they are dynamic and can significantly impact profitability. Even a strategy that looks strong in testing can fail in live trading if costs are not properly accounted for, gradually eroding any statistical advantage.
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Transaction costs in XAUUSD trading go beyond just spreads. They include commissions, slippage, and swap fees, all of which vary depending on market conditions. During high impact events like economic releases, spreads can widen sharply and slippage can increase, making trades far more expensive than expected. This creates a situation where trades may still move in the right direction but generate little or no profit due to higher execution costs.