What is Commission? - Definition & Explanation

Definition

A fee charged by a broker per trade, separate from the spread.

Commission Explained

Commission is a direct fee charged by a broker for executing a trade, typically $3-7 per lot per side. Commission-based brokers typically offer tighter spreads.

Related Terms

Spread

The difference between the bid and ask price, representing the broker's primary cost to the trader.

ECN (Electronic Communication Network)

A system that matches buy and sell orders directly between market participants.

Broker

A company that provides access to the forex market for retail traders.

Commission - Frequently Asked Questions

Commission-based brokers with tight spreads are usually better for high-volume traders. Zero-commission brokers may be simpler for beginners.

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