Trading Fees Explained

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Three points to keep

The spread is a cost on every trade, even on platforms that advertise zero commission.
Overnight financing, currency conversion and inactivity fees often exceed the visible trading cost on positions held longer.
Add every charge for a full round trip before comparing providers or judging whether a strategy can pay.

Trading fees explained properly cover more than the commission line. Every provider has to earn money, and if the headline says "zero commission" the income comes from somewhere else: the spread, financing on overnight positions, conversion margins or account fees. None of that is improper if it is disclosed. The problem is that most people compare only the number that is advertised. This page lists the charges, shows where to find them and adds them up in examples.

Costs you pay on every trade

Spread

The difference between the buy (ask) and sell (bid) price. You pay it implicitly: a position opened at the ask is immediately worth the bid. On one standard lot of a USD-quoted currency pair, each pip of spread costs $10. Spreads widen during news, around the daily rollover and in thin markets.

Commission

A fixed or percentage charge per trade. Forex accounts with raw spreads often charge per lot, quoted either per side or per round turn (open and close together). Share brokers may charge per order or a percentage. Crypto exchanges typically charge a percentage, often with lower "maker" rates for orders that add liquidity and higher "taker" rates for orders that remove it.

Slippage

The difference between the price you expected and the price you received. It is not a fee in the schedule, but it is a real cost of market and stop orders in fast markets.

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Costs that build up over time

Overnight financing (swap)

Leveraged positions held past the daily cut-off (17:00 New York for forex) are charged or credited financing. For currency pairs it reflects the interest-rate gap between the two currencies plus a mark-up; for share and index CFDs it is usually a benchmark rate plus a margin. Wednesday is commonly charged three nights for forex.

Worked example: holding for a week (illustrative)

You hold one standard lot of a currency pair from Monday morning to the following Monday morning, with a swap charge of $6.50 per night and a 1.0-pip spread on a USD-quoted pair.

Rollovers: Monday, Tuesday, Wednesday (charged triple), Thursday and Friday = 7 nights charged.
Financing: 7 × $6.50 = $45.50.
Spread: 1.0 pip × $10 = $10.
Total: $55.50, more than five times the visible spread cost.

Inactivity and account fees

Some providers charge a monthly fee after a period without trading, or a platform or custody fee on investment accounts. Small balances left on dormant accounts can be eroded by them.

Costs around deposits and withdrawals

Currency conversion: depositing pounds into a dollar account, or buying US shares from a euro account, involves a conversion rate that may include a margin. At an illustrative 0.5%, converting $5,000 costs $25 each way.
Withdrawal fees: flat charges on bank transfers or, on crypto platforms, per-network fees on coin withdrawals.
Payment method fees: card deposits to crypto platforms often carry a higher percentage than bank transfers.

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Crypto fees: a round-trip example

You buy $2,000 of a coin and later sell it for $2,200, paying a 0.1% taker fee each time (illustrative):

Fee on the buy: $2,000 × 0.1% = $2.00.
Fee on the sell: $2,200 × 0.1% = $2.20.
Total trading fees: $4.20, before spread, network withdrawal fees and any card charges.

The crypto profit calculator applies fees on both sides and shows your net result.

Costs specific to share investing

Share investors meet a different mix of charges from forex traders. Platform or custody fees may be a flat amount or a percentage of the account value each year. Funds and ETFs charge an ongoing fee inside the fund, which is deducted from the fund's value rather than shown as a separate payment. Buying shares listed in another currency usually involves a conversion, and some countries levy a transaction tax on share purchases. For regular small purchases, a fixed dealing charge can be a large share of each amount invested.

Percentage fees charged every year compound in the same way returns do. Over a long holding period, a difference of a fraction of a percent a year can grow into a noticeable share of the final value, which is why it pays to compare them carefully.

Funding rates on crypto perpetual futures

Perpetual futures have no expiry date, so exchanges use a funding mechanism to keep their price near the spot price. At set intervals, holders on one side pay holders on the other, depending on whether the contract trades above or below spot. When many traders are leveraged long, longs pay shorts, sometimes at high rates. Funding is not charged by the exchange as a fee, but it is a cost of holding the position that can outweigh trading fees for anyone holding for days.

Where to find the real figures

Regulated providers publish a fee schedule and contract specifications for each instrument, including typical or minimum spreads, commission, swap rates and margin requirements. In the UK and EU, investment firms must also give you cost and charges disclosures before you trade. Read these rather than the marketing page. If you cannot find a figure, ask in writing; a vague answer is itself informative. The provider checklist puts cost in context with the other checks.

Turning costs into a decision

Frequent short-term trading: spread and commission dominate. Small differences per trade become large over hundreds of trades.
Positions held for weeks: financing dominates, so compare swap rates rather than spreads.
Long-term investing: platform, fund and conversion fees dominate.

Costs also compound with behaviour. Two traders with identical strategies but different trading frequency will pay very different totals over a year.

Checkpoint: write down the total cost of one full round trip for the trade you actually plan, including every overnight charge, before comparing providers. If the expected gain of your strategy is not clearly larger than that figure, the strategy does not work.

Reader questions

How can a broker offer zero commission?

By earning from the spread, overnight financing, conversion or other charges, or in some share markets from payments for order flow. Zero commission does not mean zero cost.

Are maker fees always lower than taker fees?

On many crypto exchanges they are, because orders that rest in the order book add liquidity. It depends on the exchange's schedule, and some charge the same for both.

Do I pay swap on crypto held on an exchange?

Not on spot holdings you own outright. Financing applies to leveraged positions, such as margin trades, perpetual futures (through funding payments) and crypto CFDs.

Sources

European Union, MiFID II costs and charges disclosure requirements
UK Financial Conduct Authority, Conduct of Business Sourcebook disclosure rules