A fee charged per trade by the broker or platform for executing orders.
Commissions are fees charged by brokers or trading platforms for executing your buy and sell orders. They are a direct cost of trading that impacts your net profitability.
Commission Structures
Futures
- Charged per contract per side (buy and sell)
- Typical range: $1.50 – $4.00 per side
- Round-trip (open + close): $3.00 – $8.00 per contract
Forex
- ECN/Raw accounts: Commission + tight spreads (e.g., $3.50/lot per side)
- Standard accounts: No commission but wider spreads (spread IS the cost)
- STP accounts: Small markup on spreads, low or no commission
Commission Impact on Prop Trading
Example: Active Futures Trader
- 20 round-trip trades/day × 2 contracts × $4 RT commission = $160/day in commissions
- Over 20 trading days = $3,200/month — a significant portion of a $100K account's drawdown
Commissions Count Toward Drawdown
Most prop firms include commissions when calculating:
- Daily loss limit
- Maximum drawdown
- Profit target progress
A trade that breaks even in price actually loses money after commissions.
Reducing Commission Impact
- Trade less frequently: Fewer trades = fewer commissions
- Use larger time frames: Bigger moves offset commission cost
- Negotiate rates: Some platforms offer reduced commissions for volume
- Choose efficient instruments: ES micro contracts have lower commissions than full-size