Forex Broker Commissions Explained
A forex broker commission is an explicit fee charged for executing a currency trade, separate from the spread included in the buying and selling prices. The SEC’s forex investor bulletin explains that dealers may charge commissions, spread markups, or both. A zero commission headline therefore does not mean a trade costs nothing.
The practical task is to calculate what opening and closing your position will cost. That means checking the charging unit, whether the rate covers one side or both, and whether minimum fees apply. Compare that result with the spread, rather than treating either charge in isolation.
All rates and trading examples below are hypothetical, not current market averages or account offers. For costs beyond commissions, see the broader guide to forex broker fees and trading costs.
Per Side vs Round Turn Commissions
Per side means the quoted rate applies to one transaction: opening or closing. Round turn, also called round trip, covers opening and then closing the same position size.
Suppose a schedule quotes $3.50 per standard lot per side. Opening one lot costs $3.50 and closing it costs another $3.50. The round turn commission is $7. A different schedule quoting $7 per lot round turn would have the same total commission, assuming identical conditions and no other adjustments.
Never compare a per side figure directly with a round turn figure. One can look half the price without being cheaper at all. If the wording says only “per trade,” ask whether that means one execution or a completed opening and closing transaction.
Billing time is a separate question. MetaTrader’s commission documentation describes charges that can apply on entry, exit, or both, with collection at execution or at the end of a day or month. Check when the money is deducted, not just how the rate is advertised.
How to Calculate Forex Commission Per Lot
A standard forex lot commonly represents 100,000 units of the base currency, although contract details should always be checked. This convention appears in cTrader’s trading glossary. One standard lot of EUR/USD therefore represents €100,000, not automatically $100,000. The guide to forex lot sizes covers the unit conversions.
For a proportional rate that is identical on entry and exit:
Round turn commission = position size in lots × commission per lot per side × 2
At $3.50 per lot per side, a 0.20 lot position costs $0.70 to open and $0.70 to close. Total commission is $1.40. A two lot position costs $7 each side, or $14 round turn.
These calculations assume there is no minimum charge and no change in the applicable rate. They also assume you close the full amount originally opened.
For this charging model, the fee follows the position size, not the margin deposit or the profit earned. Changing the amount of margin required for the same position does not change the arithmetic. Increasing the position does.
Commission Per Million and Percentage Pricing
Some schedules use traded value instead of a fixed amount per lot. The distinction matters: cTrader’s commission type reference separates dollar charges per million dollars traded, charges per lot, and percentage charges.
For a rate quoted per $1 million of traded value:
Commission per side = trade value in USD ÷ 1,000,000 × quoted rate
Assume a commission of $30 per $1 million per side. Buying €100,000 at EUR/USD 1.1000 creates a dollar trade value of $110,000. The opening commission is $3.30.
If the same €100,000 position closes at 1.1200, its closing dollar value is $112,000. Applying the same rate gives a closing commission of $3.36, making the combined charge $6.66. The commission rate stayed unchanged; the dollar value used in the calculation did not.
A charge of 0.003% of traded value is mathematically equivalent to $30 per million, provided both use the same currency basis and charging direction. Read the currency attached to “million.” One million base currency units and one million US dollars are not interchangeable.
Comparing Commission Accounts With Spread Only Pricing
The useful comparison is the combined spread and commission cost for the same currency pair, position size, and trading conditions. As the SEC warns about commission-free forex advertising, an explicit commission can disappear while compensation remains embedded in the spread.
Convert the commission into pips
Putting both charges into pips makes the comparison easier:
Commission in pips = round turn commission ÷ pip value for the position
For a 100,000 unit EUR/USD position, a 0.0001 movement equals $10. A $7 round turn commission therefore equals 0.7 pips. Add a 0.2 pip spread and the estimated combined cost becomes 0.9 pips.
Use the pip value for the actual position and account currency. Do not carry the $10 figure across every currency pair. The guide to pips and pip values explains that calculation.
Compare the completed transaction
The following example assumes one standard lot of EUR/USD, a USD account, an unchanged spread between entry and exit, and no slippage or overnight charges.
| Cost component | Spread only pricing | Spread plus commission |
|---|---|---|
| Spread | 1.2 pips | 0.2 pips |
| Spread cost | $12 | $2 |
| Round turn commission | $0 | $7 |
| Combined estimated cost | $12 | $9 |
Here, the account charging commission costs $3 less. That result belongs to these assumptions, not to every commission account.
Do not double the full spread simply because there are two executions. Relative to midpoint prices, buying at the ask and selling at the bid incurs half the spread on each side. With an unchanged spread, those halves total one full spread. If entry and exit spreads differ, use half of each.
For a useful comparison, use observed spreads during the hours you expect to trade, rather than the lowest advertised figure. See how forex broker spreads work for the pricing side of that assessment.
Minimum Charges, Split Orders and Currency Conversion
Minimum commissions can change small trade costs
A proportional rate does not always tell the whole story. Trading systems can support minimum commissions; the cTrader symbol reference, for example, documents a minimum charge setting. Whether one applies depends on the account’s terms.
Suppose the rate is $3.50 per lot per side, with a $0.10 minimum each side. For a 0.01 lot trade, the proportional calculation produces $0.035 before rounding. The minimum raises the actual charge to $0.10 on entry and $0.10 on exit.
The completed trade costs $0.20 in commission. For that EUR/USD position, where a pip is worth $0.10, commission alone equals two pips. A small cash fee can still represent a substantial trading cost.
Check rounding rules as well. Establish whether rounding happens on each execution or after charges have been added together.
Splitting a position does not always cost more
Under a purely proportional schedule, opening and closing two separate 0.50 lot positions produces the same commission as opening and closing one lot. The total charged volume is unchanged.
That arithmetic changes if each transaction attracts a minimum or a flat ticket fee. Before splitting orders or taking several partial exits, ask whether the minimum applies per order, per execution, or per side. Do not assume a partially filled order automatically creates another minimum charge; the charging rules need to say so.
Check the commission currency
The commission currency may differ from the account currency. cTrader’s trading conditions documentation explains that commissions charged in another currency are converted into the account currency.
A fixed dollar commission can therefore produce different euro debits as exchange rates change. Check whether the account instead has a separate fixed euro schedule, which conversion rate applies, and whether conversion carries another charge. Compare amounts in one currency before deciding which rate is lower.
Volume Discounts: Compare Savings at the Same Turnover
Commission schedules can have multiple pricing levels based on trade volume or turnover. MetaTrader’s commission settings document these structures. For comparison purposes, establish how the qualifying volume is counted and when the lower rate begins.
Ask whether opening and closing volumes both count, when the measurement period resets, and whether reaching a threshold reprices earlier transactions or only later ones. A rebate credited afterward should also be distinguished from a lower charge at execution.
Suppose 50 completed one lot trades cost $7 each, producing $350 in commissions. Reducing the rate to $6 saves $50 at that same turnover.
Making ten extra completed one lot trades at $6 would create another $60 in commissions, before spreads or trading losses. Trading more just to obtain a discount can defeat the purpose. Compare savings against the activity your strategy already calls for.
Check What the Trading Statement Actually Includes
Reconcile the published schedule with completed transactions. Match the currency pair, executed volume, opening charge, closing charge, and any currency conversion. Check for delayed commission entries if the schedule uses daily or monthly billing.
For US accounts with NFA Forex Dealer Members, NFA Compliance Rule 2-36(p) requires applicable commissions and other fees to be disclosed per trade on transaction confirmations in the account’s base currency. This is a defined US requirement, not a statement about every jurisdiction.
Also distinguish gross from net profit. The cTrader Trade Watch documentation separates profit before commission and swaps from profit after those adjustments. Check the definition used by your own statement rather than relying on the column name alone.
Profit calculated from actual entry and exit prices already reflects the prices you traded, including the effect of the spread. Subtracting an estimated spread again would double count it. Likewise, do not deduct commission again from a net figure that already includes it.
Keep financing entries separate during this check. The treatment of holding costs belongs in the guide to forex swap rates and overnight charges.
Include Commissions in Strategy Results
Small fees become less small when repeated. Suppose 100 completed one lot trades produce $500 of profit from executed entry and exit prices, before explicit charges. At $7 round turn per trade, commissions total $700. The result becomes a $200 loss before any financing or other fees.
That example shows why commission assumptions belong in strategy testing and trading records, not just account comparisons. Record total commission alongside total traded volume. An average fee per trade can be misleading if position sizes vary.
Before accepting a pricing schedule, confirm:
- The charging unit and currency.
- Whether the rate is per side or round turn.
- Any minimum charge, rounding rule, or volume threshold.
- When charges are deducted and where they appear on statements.
The CFTC advises that risks, fees and commissions should be disclosed before an account is opened. Ask for unclear terms in writing.
A useful commission comparison ends with a cost you can reproduce for your own trade size. Use it as one part of choosing a forex broker, rather than treating the smallest advertised number as the decision.