The lesson in three lines
- The spread is paid on every trade the moment it opens; commission, where charged, is paid on the way in and out.
- Holding a leveraged position overnight adds a financing charge that grows with time and can dwarf the spread.
- Currency conversion, withdrawal, network and inactivity fees are easy to miss and worth checking before you deposit.
Here are trading fees explained from the ground up, using one set of illustrative numbers you can check. Costs matter more for beginners than for anyone else, because small, frequent trades pay the same fixed costs again and again while the moves they are hoping to catch are small.
The spread: the cost you pay first
Every quote has a bid (the price you can sell at) and an ask (the price you can buy at). The difference is the spread. If EUR/USD shows 1.16480 / 1.16490, the spread is 0.00010, or 1 pip. On one standard lot of 100,000 euros, one pip is worth $10, so the moment you open that trade you are $10 behind.
Spreads are not fixed. They widen when markets are thin, such as just after the weekly forex open, overnight in a market's own time zone, or in the seconds around a major data release. "From 0.0 pips" in an advert describes the best moment, not the typical one.
Commission
Some accounts add a separate commission and offer tighter spreads in return. It is usually charged per lot on each side of the trade. With an illustrative $3.50 per lot per side, one standard lot opened and closed costs $7 in commission. For shares, commission may be a flat fee per trade or a percentage of the amount traded.
Overnight financing (swap)
A leveraged position held past the daily rollover, 17:00 New York time for forex, is charged or paid a financing amount based on interest rates and the provider's markup. The charge for the weekend is normally applied on Wednesday night, so Wednesday's swap is usually three times the usual amount.
Illustrative example: a $100,000 position with a net financing rate of 2.5% a year costs about $100,000 × 0.025 ÷ 365 = $6.85 a night. Held for a week, that is about $47.95. The spread was paid once; the swap keeps coming.
Trading fees explained on one position
| Cost | How it is calculated | Illustrative amount |
|---|---|---|
| Spread | 1 pip × $10 per pip (1 lot EUR/USD) | $10.00 |
| Commission | $3.50 per lot, in and out | $7.00 |
| Financing | 3 nights × $6.85 | $20.55 |
| Total | $37.55 |
At $10 a pip, this trade must move almost 3.8 pips in your favour just to break even. For a short-term trader aiming at 10 or 20 pips, that is a large share of the target.
Slippage as a hidden cost
If you place a market order or a stop-loss in a fast market, the fill can be worse than the price on screen. On one lot of EUR/USD, being filled 2 pips worse than expected costs $20, twice the spread in the example above. Slippage rarely appears as a line on a statement, which is why it is easy to overlook.
Costs outside the trade itself
Currency conversion
If your account is in pounds or euros and you buy US shares, the broker converts your money, often at a rate with a markup built in. At an illustrative 0.5%, buying $2,000 of shares costs $10 in conversion, and selling costs another $10. The same applies when profits and losses on a CFD are booked in a currency different from your account. Our page on forex exchange explains how to spot the markup.
Crypto fees
- Trading fee: often a percentage per trade. At 0.1%, a $1,000 buy costs $1 and so does the sell.
- "Simple buy" spread: instant-buy screens may add a spread on top, sometimes much larger than the trading fee.
- Network fee: paid to the blockchain when coins move, varying with network congestion.
- Withdrawal fee: set by the platform, often a fixed amount per withdrawal per network.
The crypto profit calculator includes the trading fee on both legs.
Account fees
- Inactivity fees after months without a trade.
- Deposit or withdrawal fees, especially for cards and international transfers.
- Platform or data subscriptions.
- Fund charges if you hold ETFs or other funds.
Which costs apply in which market
| Cost | Forex and gold CFDs | Shares (owned) | Crypto (spot) |
|---|---|---|---|
| Spread | Yes, every trade | Yes, usually small on large companies | Yes, can be wide on instant-buy screens |
| Commission or trading fee | On some account types | Often, flat or percentage | Usually a percentage |
| Overnight financing | Yes, on leveraged positions | No, unless bought on margin | No for spot; yes for many derivatives |
| Currency conversion | If P&L is in another currency | If the share is priced in another currency | When paying in or out in local currency |
| Transfer or network fees | Deposit and withdrawal only | Sometimes, when moving shares between brokers | Yes, when moving coins |
Taxes and stamp duties on some share purchases are separate again and depend on where you live and what you buy.
How to compare costs fairly
- Decide how you would actually trade: size, how often and how long positions stay open.
- Price one typical trade using each provider's full fee schedule, not its headline spread.
- Add non-trading costs you would realistically pay in a year.
- Check the typical spread at the time of day you would trade, not the minimum.
Cost is one of the checks in how to choose a broker, but it comes after regulation and withdrawals.
Keep a simple cost log
For your first months of trading or investing, note every cost next to every trade: spread paid, commission, financing, conversion and withdrawal fees. Add them up monthly and compare the total with your gains and losses. Beginners are often surprised to find that costs, not bad calls, explain most of the difference between a small profit and a small loss.
Beginner questions
What is the difference between a spread and a commission?
The spread is built into the buy and sell prices; commission is a separate charge shown on your statement. Some accounts have wider spreads and no commission, others have tighter spreads plus commission.
Why was I charged three times the swap on Wednesday?
Forex trades normally settle two business days later, so a position held over Wednesday's rollover rolls over the weekend days too. Providers apply the weekend financing on that night.
Are zero-commission share trades really free?
Not entirely. The provider may earn from the spread, from currency conversion, from interest on cash balances or from how orders are routed. Read the full fee schedule.
Sources
- UK Financial Conduct Authority, CFD rules for retail clients
- European Securities and Markets Authority, CFD product intervention measures