Glossary
Commission
Commission is a fee charged per trade, usually per lot or per contract, on top of the spread.
What it means
On forex and CFD accounts, commission is usually quoted per standard lot per round turn, which covers opening and closing the trade. On futures, it is quoted per contract, per side or per round turn, and exchange and data fees may be included. Prop firm accounts are usually simulated, but they still charge commission so that results reflect real trading costs.
Commission reduces the account's profit and moves it toward its loss limits. A trader who makes many small trades can find that commission takes a large share of the gains. Traders should add commission to the spread when working out the real cost of a trade, and firms should publish their rates for each instrument.
Worked example
Illustrative numbers: an account charges $5 per standard lot per round turn. A trader makes 20 trades of 3 lots in a week, which is 60 lots and $300 in commission. If the trades made $1,200 before costs, the net result is $900.
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