Introduction
Profit Isn’t Just About Pips
Most traders measure their results in pips or R:R.
Smart Money measures net efficiency.
Because every trade win or lose, comes with a cost: commission.
It’s small, it’s invisible on the chart,
but over time, it’s the difference between consistency and slow bleed.
What Is Commission in Trading?
The Definition:
📊 Commission is the fee your broker charges for executing a trade.
💬 In simple terms:
Commission is the price you pay to access liquidity.
It’s separate from spread,
you pay commission directly per trade,
usually based on trade size or volume.
How Commission Works
Each broker structures commission differently:
- Per Lot: A fixed amount per standard lot traded (e.g., $7 round turn).
- Per Side: Charged both when opening and closing the trade.
Percentage-Based: Some CFD and crypto brokers charge a small percentage of position value.
💡 Even small commissions add up when trading frequently or scalping.
How to Manage Commission Like Smart Money
1️⃣ Know Your Broker’s Fee Structure:
Understand if it’s per lot, per side, or percentage-based.
2️⃣ Factor Commission Into Every R:R Calculation:
Add it as a small cost to your net return.
3️⃣ Avoid Overtrading:
Frequent entries increase cost without improving quality.
4️⃣ Use High-Probability Setups:
Fewer, higher-quality trades yield better net results.
5️⃣ Journal Commission Data:
Track average cost per trade in your trading journal.
📍 Awareness turns hidden costs into controlled metrics.
Example
Commission Calculation
You trade 1 lot of EURUSD.
Your broker charges $3.50 per side.
That’s $7 total per round trade.
If you take 100 trades a month,
that’s $700 in cost, before spread or slippage.
📍 Professional traders know, every cost counts.
The Do Nots
Common Mistakes Traders Make
❌ Ignoring commissions when testing strategies → skewed performance metrics.
❌ Overtrading on small setups → fees eat profits.
❌ Comparing brokers only by spread → incomplete cost analysis.
❌ Not logging costs in journal → false sense of profitability.
Final Thoughts
Commission is more than a small number in your account history.
It’s a key variable that defines net performance.
Smart Money plans for it, tracks it,
and optimises execution to reduce unnecessary cost.
If you want to trade like a professional,
start thinking in net returns, not gross wins.