Three things to keep
- The spread and any commission are paid on every trade; swaps are paid for every night a leveraged position stays open.
- Currency conversion, account and withdrawal fees are easy to overlook but can match the dealing costs.
- Over 20 years, a 1% yearly cost can take a large share of the final value of an investment.
Trading fees explained properly start with a simple point: every cost comes straight out of your result, whether you win or lose. Some are obvious, such as a commission per trade. Others are built into the price you see or charged quietly overnight. This guide lists the charges you are likely to meet in forex, gold, shares and crypto, shows how to add them up, and then zooms out to what they do to a portfolio over decades.
Trading fees explained, starting with the spread
Every quote has a buying price and a selling price, and the difference is the spread. You pay it the moment you open a position, because you buy at the higher price and could only sell straight back at the lower one. On forex, spreads are measured in pips; on shares, in cents or as a percentage.
Spreads are rarely fixed. They tend to widen when markets are quiet, around the daily 17:00 New York rollover, before and after major economic releases, and on less-traded pairs and shares. When comparing brokers, look at typical spreads at the times you would actually trade, not the lowest figure in an advert.
Costs on a share purchase
Shares have spreads too, and often a dealing fee. On an illustrative purchase of 50 shares at $40, a $2,000 investment, a $5 fee to buy and another $5 to sell comes to $10, or 0.5% of the amount invested, before the spread. On a $200 purchase the same fees would be 5%, which is why small, frequent trades are so expensive.
Commissions
Some accounts charge a commission in addition to a narrower spread. Forex brokers often quote it per lot per side, so you pay it once to open and once to close. Share-dealing platforms may charge a flat fee per trade, a percentage, or nothing at all, making their money from the spread, from currency conversion or from interest on cash balances instead. Always ask how a "commission-free" provider is paid.
Overnight financing (swaps)
Leveraged positions in forex, gold and CFDs are charged or credited a financing amount for each night they stay open past 17:00 New York time. For currency pairs it reflects the interest-rate difference between the two currencies plus the broker's own margin, so it can be a cost on one side and a small credit, or a smaller cost, on the other. Most brokers apply three days of swap on one night, usually Wednesday, to cover the weekend.
Swaps are the cost that surprises longer-term traders most. A charge that looks trivial per night becomes significant over weeks and months, which is one reason leveraged products are a poor fit for buy-and-hold investing.
A worked example: one forex trade, held for a week
The figures below are illustrative, not quotes from any provider. Suppose you open 1 standard lot of EUR/USD on Monday and close it the following Monday.
| Cost | Assumption | Amount |
|---|---|---|
| Spread | 0.8 pips × $10 per pip | $8.00 |
| Commission | $3.50 per lot per side, paid twice | $7.00 |
| Swap | −$7 per night; five rollovers including a triple Wednesday = 7 nights charged | $49.00 |
| Total | $64.00 |
The trade needs to gain 6.4 pips just to break even, and more than three-quarters of that hurdle comes from holding it for a week rather than from the spread or commission.
Costs that sit outside the trade
- Currency conversion. Buying foreign shares, or funding an account in a different currency, usually involves converting money at a rate that includes a margin. On $5,000 of US shares bought from a sterling account, a 0.5% conversion charge costs $25 on the way in and again on the way out: $50 for the round trip, before any dealing fees.
- Account and platform fees. Some investment platforms charge a yearly percentage of your holdings or a fixed monthly fee.
- Inactivity fees. Some brokers charge dormant accounts a monthly fee after a period without trades.
- Deposit and withdrawal fees. Card, bank-transfer and crypto withdrawals can each carry a charge.
- Fund charges. Funds and ETFs take an ongoing charge each year from the assets they hold, reflected in their price rather than billed to you.
- Taxes and stamp duties. Some countries charge a transaction tax on share purchases, and gains may be taxable.
Crypto fees
Crypto platforms typically charge a trading fee, often split into lower "maker" fees for orders that wait in the order book and higher "taker" fees for orders that fill immediately. "Instant buy" buttons frequently hide a wider spread. Moving coins off a platform adds a withdrawal fee and a network fee that varies with congestion. Our crypto profit calculator applies a percentage fee on both the buy and the sell so you can see the effect on your result.
Why small percentages matter over decades
For long-term investors the most important fees are the ones charged every year. The illustration below assumes a hypothetical steady return of 6% a year before costs; it is an arithmetic example, not a forecast of any market.
| $10,000 invested for 20 years | Growth after costs | Final value |
|---|---|---|
| No yearly costs | 6% a year | $32,071.35 |
| 1% of assets charged each year | 5% a year | $26,532.98 |
The 1% annual charge reduces the final value by $5,538.37, more than half of the original $10,000, because every year's fee also removes the future growth that money would have earned. That is why comparing ongoing charges is one of the most valuable checks an investor can make, and why frequent trading, which pays spreads and commissions again and again, is so hard to make profitable.
A quick cost checklist
- What is the typical spread at the times I would trade?
- Is there a commission, and is it per side or per round trip?
- What are the long and short swap rates on the instruments I would hold overnight?
- What will currency conversion cost, in both directions?
- Are there account, inactivity, deposit or withdrawal fees?
- For funds, what is the ongoing charge each year?
Every regulated firm should publish these figures. If you cannot find them, that is itself useful information when choosing a broker.
Reader questions
What is the biggest cost of trading forex?
For short trades, usually the spread and any commission. For positions held for days or weeks, overnight swaps can become the largest cost.
Why do spreads widen?
Spreads widen when fewer buyers and sellers are active, for example around the daily rollover, during holidays, around major economic news and on less-traded instruments.
Are commission-free brokers really free?
No provider works for nothing. Commission-free platforms are typically paid through wider spreads, currency conversion margins, interest on cash balances or other fees.