Commission

What is a commission?

A commission is a fee a broker charges directly for executing a trade, separate from the spread. Instead of building its profit entirely into a wider bid-ask gap, a commission-based broker passes on a much narrower, near-market raw spread and charges an explicit fee on top — typically per lot traded, and often per side (opening and closing each count separately, sometimes summarized as a “round-turn” price covering both).

This model is standard on ECN and raw/pro-style account types, where the broker routes orders to external liquidity providers rather than pricing trades internally.

A worked (illustrative) example

Commission structures vary by broker and account tier, so always check a specific broker’s fee schedule rather than assuming a figure. As a hypothetical illustration: if a broker charges $3.50 per 100,000 units (one standard lot) per side, a round-turn trade (opening and closing) on one standard lot would cost $7 in commission, regardless of how many pips the spread itself is.

Compare that to a commission-free account with, say, a 1.2-pip average spread on the same pair: on a standard lot that spread alone costs roughly $12. A trader who trades frequently or in large size may find the raw-spread-plus-commission combination cheaper overall, even after adding the commission back in — but this depends entirely on the actual numbers each broker publishes.

Why commission structure matters

Commission accounts make costs more transparent and predictable: the spread portion is close to the real interbank price, and the fee is a clearly stated, fixed number rather than hidden inside a marked-up spread. This particularly benefits active traders, scalpers, and anyone running an Expert Advisor, where costs need to be modeled precisely.

The trade-off is that a commission is charged even on a losing trade, so it’s a real cost to factor into risk-reward ratio calculations, not just the spread. When comparing brokers, always look at the total cost — spread plus commission — for the instrument and lot size you actually trade, rather than either figure in isolation.

Quick recap

• A commission is a separate, explicit per-lot fee, distinct from the spread.
• It’s typical on ECN and raw-spread account types.
• Total trading cost = spread cost + commission, and both should be compared together.
• Exact commission rates differ by broker and account tier — always verify current published fees.