See how trading commissions and spreads erode returns, especially for frequent traders.
The spread is usually the larger cost and is invisible because it never appears on a statement. Expressing the total as a percentage of the portfolio makes it comparable with a fund expense ratio. An active trader can easily pay more in spreads and commissions than a managed fund charges, while believing they are investing cheaply.
Brokerage Fee Impact
Annual cost = commission × trades + trade value × spread × trades
Annual cost = commission × trades + trade value × spread × trades The spread is usually the larger cost and is invisible because it never appears on a statement. Expressing the total as a percentage of the portfolio makes it comparable with a fund expense ratio.
An active trader can easily pay more in spreads and commissions than a managed fund charges, while believing they are investing cheaply.
This calculator takes 5 inputs: Average trade value, Trades per year, Commission per trade, Bid-ask spread, Portfolio value. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.