What is a commission in trading?
In one line: A commission is a fee your broker charges for placing a trade, either per trade, per share or per contract, on top of the price you pay.
How it works in each market
- US stocks and ETFs: many big brokers now charge $0 commission for online trades. Tiny regulatory fees may still apply when you sell.
- Options: usually a fee per contract, even at "commission-free" brokers.
- Futures: a fee per contract, each way, plus exchange and regulatory fees.
- Forex: often no commission, with the cost built into the Spread. Some accounts show a tighter spread plus a commission per Lot.
Every broker is different, so read their pricing page. "Round turn" means in and out together. "Per side" means each one.
A simple example
Say a futures broker charges $1.00 round turn, all fees in, for one micro contract. You plan a trade on MES, where each point is worth $5.
- Stop: 4 points away = $20 of risk.
- Fees: $1.00 = 5% of your risk.
Now shrink the stop to 1 point. Risk is $5, and the same $1.00 fee is 20% of it. Same fee, very different weight.
The futures tick value calculator turns points into dollars for any contract.
Why it matters
Costs are the one part of a trade you know in advance. They come out of every trade, win or lose.
Small stops and many trades make costs heavier. That's a big reason very short-term styles are harder than they look. A trade aiming for 2 units of reward has to clear the fees first.
A common mistake
Ignoring costs because each one is small. $1 feels like nothing. Over 200 trades it's $200, and that's before the spread and Slippage.
Add a "fees" column to your journal for one month. Seeing the total is often a surprise. Our journal guide shows how.
"Free" isn't fully free either. A $0 commission stock trade still crosses the spread.
Questions
Are there really zero-commission brokers?
Many US brokers charge $0 commission on online stock and ETF trades. You still pay the spread, and small regulatory fees can apply on sales.
Is the spread a commission?
Not technically, but it's a real cost. Forex brokers that charge "no commission" earn mostly from the spread instead.
Do commissions count toward my risk per trade?
They should. If you plan to risk $50, include the round-trip fees in that $50, or your real risk is a bit higher than planned.
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