A trading fee is a cost charged when you buy or sell an investment, such as stocks, ETFs, or options. It is sometimes called a commission and varies depending on the brokerage or trading platform.
Types of Trading Fees
- Flat fee: A fixed cost per trade (e.g., $9.99 per transaction).
- Percentage-based: Calculated as a percentage of the trade’s value.
- Zero-commission: Many online brokers now offer free trades but may earn revenue from spreads or other fees.
Why It Matters
Trading fees directly reduce investment returns, especially for frequent traders. Understanding fee structures helps investors choose the right brokerage and trading strategy.
Final Thoughts
While many brokers now offer low or no trading fees, investors should still watch for hidden costs like spreads or account maintenance fees. Keeping fees low is key to maximizing investment growth.