Some providers charge a commission when a trade is executed. Knowing the fee schedule helps you estimate the total cost before you enter.
The idea
Commission may be a fixed amount, a percentage, or a fee based on trade size. Some accounts charge on each side of a trade, while others present a combined charge. Other fees may apply depending on the provider and product. A low spread does not on its own show the full cost if a separate commission is charged.
Apply the idea
Suppose a provider charges $2 to open and $2 to close a position. If the trade produces a $30 gross gain after the bid and ask prices are accounted for, the net result is $26 before any other charges. If the gross result were a $30 loss, the same commissions would increase the loss to $34.
Key takeaway
Check the fee schedule for the instrument and account, including whether a fee applies on entry and exit. Compare costs using the same trade size and holding period.
