Commission
Also called commission fee, trading commission, broker commission, round-turn commission
Commission is a fee your broker charges for executing a trade, usually a fixed amount per lot, per share or per order. It is separate from the spread and is charged whether the trade wins or loses.
Commission is easy to underestimate because it is quoted as a small fixed amount, apart from the price. It still moves your break-even away from you: every trade starts slightly further from flat than the price quote suggests.
What commission pays for, and what "commission-free" means
Accounts usually come in two styles, and they differ in how they use the spread, the gap between the buy price and the sell price. One gives you a tight spread and charges commission as a separate line. The other charges no separate fee and widens the spread instead.
On the first style, the spread you see is close to the raw price from the broker's liquidity providers, the banks and firms that fill the orders. The commission is the broker's pay for passing your order to them, because the broker is not adding its own margin to the spread.
So "no commission" or "commission-free" trading is not free trading. You still pay, through the price you get.
How commission is quoted: per side, round turn, per lot
The same fee can be written several ways. Convert every quote to one unit before you compare accounts.
| Quote style | What it means | To get your real cost |
|---|---|---|
| Per side | Charged once at the open, once at the close | Double it |
| Round turn | Open and close together | Use as it is |
| Per lot | For one standard lot (100,000 units) | Multiply by your lot size |
| Per million | For 1,000,000 units traded | Divide by 10 for one standard lot |
| Percent of value | A share of the trade's money value | Multiply by position value |
The common misread is comparing one broker's per-side figure with another's round-turn figure. The first looks half the price and is not.
Working out what commission costs on one trade
The figures here are an illustrative example. You buy 1 standard lot of EUR/USD, where one pip is worth $10. The account charges $3.50 per lot per side, and the spread is 0.2 pips.
Price has to move 0.9 pips in your favour before the trade is flat. On 0.10 lots the money cost shrinks to $0.90, but the cost in pips stays 0.9. That is why pips are the useful unit for comparing.
Now take a commission-free account with a 1.2 pip spread on the same trade: 1.2 × $10 = $12. The chart below also adds a commission-free account whose spread is exactly 0.9 pips, the point where the two styles cost the same.
The result can flip. In this example the commission-free account wins only if its spread is under 0.9 pips, so the answer depends on the numbers, not the account label.
The rule you can copy: divide the round-turn commission by the pip value per lot, add the spread, and pick the lower total. The $10 per pip used here applies to pairs quoted in USD. On other pairs, use that pair's pip value and convert the commission into the same currency first.
Do it for the pairs you trade, at the hours you trade them. Spreads widen at quiet hours and around news while commission stays the same, so the cheaper account can change by session.
Cost weighs more on small targets. In this example 0.9 pips is 18% of a 5-pip target but only 1.8% of a 50-pip target.
Where commission shows up on your trading platform
- Account or contract specification. The broker lists the rate and its unit for each instrument.
- Trade history. Commission has its own column next to swap and profit. The profit column is often shown before commission, so add the columns to get your net result.
- Balance. Commission is deducted from your balance, not hidden in the price.
- Backtests and strategy testers. On charting and testing software, commission is a setting you type in yourself. Left at zero, the results look better than live trading will.
Checks before you trade a commission account
- Check the commission currency. If it differs from your account currency, it is converted on each trade.
- Ask whether a minimum fee per order applies. Small positions then pay more in proportion.
- On a prop firm account, remember commission comes off your balance, so it counts toward daily loss and drawdown limits.
- Recalculate the all-in cost whenever you switch account type.
FAQ
Do I pay commission if my pending order never fills?
No. Commission is charged on volume that is actually executed. A pending order that is cancelled or expires without filling costs nothing.
Does higher leverage raise my commission?
Not directly. Commission follows position size. Leverage only lets you open bigger positions, and bigger positions cost more.
Why did my balance drop the moment I opened a trade?
Some brokers charge the full round-turn commission at the open. Others take half at the open and half at the close. Either way, a new position shows a loss of spread plus commission at the open. That is normal and is not slippage.