Brokerage Fee Impact Calculator

See how trading commissions and spreads erode returns, especially for frequent traders.

About Brokerage Fee Impact Calculator

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.

Formula

Brokerage Fee Impact

Annual cost = commission × trades + trade value × spread × trades

spread: Half-spread paid on entry and exit, charged on the traded value not the portfolio

Worked example

With the default values below, Brokerage Fee Impact Calculator returns Annual Trading Cost of $324.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Average trade valueminimum 0: 5,000
Trades per yearminimum 0: 24
Commission per trademinimum 0: 6
Bid-ask spreadaccepts 0–5 %: 0.15 %
Portfolio valueminimum 0.01: 120,000

Results

Annual Trading Cost: $324.00
Trading Cost as Share of Portfolio: 0.270%
Commission Cost: $144.00
Cost of the Spread: $180.00
Cumulative Cost Over Ten Years: $3,240.00

Step by step

1Values used
2Brokerage Fee Impact
3Annual Trading Cost= 324.00
4Trading Cost as Share of Portfolio= 0.270
5Commission Cost= 144.00
6Cost of the Spread= 180.00
7Cumulative Cost Over Ten Years= 3,240.00

Assumptions and limits

The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
In particular, this calculator does not take inflation or tax into account.
Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Brokerage Fee Impact calculated?

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.

Why does Brokerage Fee Impact matter?

An active trader can easily pay more in spreads and commissions than a managed fund charges, while believing they are investing cheaply.

What values do I need to enter?

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.