# Commissions and Fees

> Commissions, exchange, clearing and regulatory fees add up. Learn how commission structures work, the fees hidden in each trade and how to compare brokers.

Source: https://learn.tradelabsai.com/orders/commissions-and-fees/  
Track: Orders and Execution · Level: Intermediate · Updated: 2026-10-03  
Publisher: TradeLabs AI (https://tradelabsai.com). Education, not financial advice.  
Cite as: TradeLabs Learn, "Commissions and Fees", https://learn.tradelabsai.com/orders/commissions-and-fees/

Commissions and fees are the explicit costs of trading: the amounts your broker, the exchange, the clearing house and regulators charge for each trade. Since many US brokers moved to zero commission stock trading in 2019, it is easy to assume trading is free. It is not. Fees still apply in most markets, and for active traders the difference between fee structures can add up to thousands a year.

## Commission structures

| Structure | How it works | Common in |
|---|---|---|
| Zero commission | No per trade charge; broker earns from spreads, order flow or interest | US stocks and ETFs at many brokers |
| Flat fee per trade | A fixed amount regardless of size | Some stock brokers, international markets |
| Per share | A small amount per share, often with a minimum and maximum | Direct access stock brokers |
| Per contract | A fixed amount per futures or options contract, per side | Futures and options |
| Percentage of value | A share of the trade value | Crypto exchanges, many non US stock brokers |
| Spread only | No commission; cost built into a wider spread | Many forex and CFD accounts |

## The fees behind each trade

Beyond the broker's commission, a trade can include:

- **Exchange fees:** charged by the trading venue; in US stocks, venues often charge takers and pay makers small rebates.
- **Clearing fees:** for clearing and settling the trade.
- **Regulatory fees:** in the US, the SEC's Section 31 fee and FINRA's trading activity fee apply to stock sales, and the NFA charges a small fee on futures.
- **Options contract fees:** per contract charges from the broker and the options clearing system.
- **Transaction taxes:** such as UK stamp duty on share purchases or financial transaction taxes in some European countries.

**Example: What a futures round trip really costs**
A broker advertises $0.50 per Micro E-mini contract. The full round trip for one contract might be: broker $0.50 × 2, exchange fees about $0.35 × 2, NFA fee $0.02 × 2 and clearing around $0.10 × 2, about $1.94 in total, nearly double the headline rate. Check the full schedule.

## Maker and taker fees

Many exchanges, especially in crypto and futures, charge different fees to orders that add liquidity (makers) and orders that take it (takers).

| Trade style | Typical crypto fee (illustrative) | On $50,000 traded |
|---|---|---|
| Maker | 0.02% to 0.10% | $10 to $50 |
| Taker | 0.05% to 0.20% | $25 to $100 |

Fees often drop with higher monthly volume. Using limit or post-only orders can cut costs significantly. See [Post-Only and Reduce-Only Orders](https://learn.tradelabsai.com/orders/post-only-and-reduce-only-orders/).

## "Free" trading is not free

Zero commission brokers earn money in other ways: payment for order flow, the interest on cash balances, margin lending, securities lending and spreads on currency conversion. None of these is necessarily bad, but they mean the cheapest headline commission is not always the cheapest total cost. Compare execution quality as well. See [Best Execution and Execution Quality](https://learn.tradelabsai.com/orders/best-execution/) and [Order Routing and Smart Order Routing](https://learn.tradelabsai.com/orders/order-routing/).

## Other account fees

- **Platform and data fees** for advanced tools and real time data. See [Market Data Fees](https://learn.tradelabsai.com/orders/market-data-fees/).
- **Inactivity fees** at some brokers.
- **Withdrawal and transfer fees.**
- **Currency conversion fees** when trading foreign markets.
- **Margin interest** on borrowed money. See [Margin](https://learn.tradelabsai.com/markets/margin/).

## Comparing brokers on cost

1. Estimate how many trades you make a month, in which markets and what size.
2. Calculate commissions and all pass through fees for that activity.
3. Add expected spread and slippage differences, which can outweigh commissions.
4. Add fixed costs: platform, data and inactivity fees.
5. Compare the total, not the headline. See [All-In Trading Cost](https://learn.tradelabsai.com/orders/all-in-trading-cost/) and [How to Choose a Broker](https://learn.tradelabsai.com/industry/how-to-choose-a-broker/).

## Frequently asked questions

### Is commission free trading really free?

No. You still pay spreads and regulatory fees, and brokers earn from order flow, interest and other services.

### What is a maker fee?

A fee, often lower or even negative (a rebate), charged when your order adds liquidity by resting in the order book.

### Do commissions matter for long term investors?

Much less than for active traders, because they trade rarely. Fund expense ratios and taxes usually matter more.

## Sources

- Wikipedia, [Broker](https://en.wikipedia.org/wiki/Broker)
- Wikipedia, [Transaction cost](https://en.wikipedia.org/wiki/Transaction_cost)

## Continue learning

- Next lesson: [Market Data Fees](https://learn.tradelabsai.com/orders/market-data-fees/)
- Previous lesson: [VWAP, TWAP and POV Execution](https://learn.tradelabsai.com/orders/vwap-twap-and-pov-execution/)
- Related: [VWAP, TWAP and POV Execution](https://learn.tradelabsai.com/orders/vwap-twap-and-pov-execution/): VWAP, TWAP and POV algorithms split large orders over time to reduce impact. Learn how each one schedules trades, its strengths and when to use it.
- Related: [Transaction Costs](https://learn.tradelabsai.com/orders/transaction-costs/): Transaction costs include commissions, spreads, slippage, market impact and missed trades. Learn each part, how to estimate it and why it decides profits.
- Related: [All-In Trading Cost](https://learn.tradelabsai.com/orders/all-in-trading-cost/): Your all-in trading cost combines commissions, fees, spreads, slippage, financing and fixed costs. Learn to calculate cost per trade, per unit of risk and per year.
- Related: [Spread Costs](https://learn.tradelabsai.com/orders/spread-costs/): The spread is often your biggest trading cost. Learn to calculate spread cost per trade and per year, compare markets and cut what you pay in spreads.
- Related: [Market Data Fees](https://learn.tradelabsai.com/orders/market-data-fees/): Real-time quotes and order book data often cost extra. Learn why exchanges charge for data, professional vs non-professional status and what data you actually need.
- Related: [How to Choose a Broker](https://learn.tradelabsai.com/industry/how-to-choose-a-broker/): A practical checklist for choosing a broker: regulation, safety of funds, real trading costs, markets, platforms, support and the red flags to watch for.
- Related: [Post-Only and Reduce-Only Orders](https://learn.tradelabsai.com/orders/post-only-and-reduce-only-orders/): Post-only orders guarantee you add liquidity and pay maker fees; reduce-only orders can only shrink a position. Learn how both work on crypto and futures venues.