A signal says the level is here. The trade costs you the spread on the way in, the spread on the way out, fees on both, and whatever slippage your size causes against the resting book. On a liquid instrument those are rounding. On a thin one they can be most of the move you were trading.
Compute it before, not after
The useful habit is to express the cost in the same units as the expected move, before deciding whether the setup is worth taking. If the structure suggests a move of a certain size and the round trip consumes a meaningful fraction of it, the edge was never really there.
This kills a surprising number of otherwise reasonable ideas on smaller books, and that is the point. Killing them before the position rather than after is the difference between a discipline and a lesson.
Depth matters more than spread
The quoted spread describes the first unit of size. What matters is what your whole order costs, which depends on how much is resting nearby. A tight spread over a shallow book is more expensive than a wider spread over a deep one, for any size that is not trivial.
This is why depth belongs beside the map rather than in a separate tool. The same level on two venues can be a good trade on one and not on the other purely because of what is resting there.
It changes with conditions
Cost is not a constant you can measure once. It widens exactly when you most want to trade — during a flush, around an expiry, in the illiquid hours. A cost estimate taken in calm conditions will understate what a stressed entry costs, often by a lot.
Where it belongs
In the grade, not the gate. A setup on an expensive book is not forbidden; it is worse, and it should be scored as worse so that the comparison across instruments stays honest.