A visible cost that does not widen
Commission's real advantage is that it does not change: the spread widens around news and in quiet hours, while commission stays put. Planning cost in advance gives you a fixed line rather than a variable one.
It is charged per lot rather than per trade, so it scales with size: 0.10 lots pays a tenth of the full-lot commission. This means account comparisons must use your habitual size rather than a standard lot you never actually trade.
The same cost, distributed two ways
Your broker's execution model determines who stands on the other side of your trade and how your price is formed. It is a cost line rather than a contractual detail: the two common models distribute the same cost differently — one inside the spread, the other split between a tighter spread and an explicit commission.
The correct comparison is total cost on the reference account — 0.10 lots of gold — not either component alone, because comparing spreads in isolation favours whichever model hides its cost.
The formula
Total commission = per-lot commission × position size × 2 (entry and exit)
A worked example
An advertised commission of $7 per lot per side. On 0.10 lots: 7 × 0.10 × 2 = $1.40 for the full round trip.
Against 1% risk on a $1,000 account — $10 — commission alone is 14% of the risk budget. Add a $1.20 ECN spread and the total is $2.60, or 26%. The figure looks small in dollars and large as a ratio, and it is that ratio which decides whether a short-target strategy is viable.
Common mistakes with this term
- Counting commission on one side, when it is normally charged on both entry and exit.
- Treating a commission-free account as automatically cheaper, when the cost moved into a wider spread.