Commission refers to the fee charged by a broker or a trading platform for facilitating a trade on behalf of a trader. This fee is typically calculated as a percentage of the transaction value or as a fixed amount per trade. In many markets, commissions can vary widely depending on the broker, the asset being traded, and the trading volume. It is essential for traders to understand these costs, as they can impact overall trading profitability. Some brokers might offer zero-commission trading models but may compensate through spreads or other service fees. Consequently, evaluating the complete cost structure, including commissions, is crucial for informed trading decisions.
