Commission is a fee your broker bills you. The spread is the gap between the bid and the offer, paid inside the price rather than charged as a line item. They are the same expense wearing different clothes, and the only figure that matters is what both of them together cost you per round turn.
Traders spend real effort comparing commission schedules and almost none comparing spreads, because one arrives as a number on a statement and the other never appears anywhere. That asymmetry is the whole reason "zero commission" became a marketing line rather than a discount.
What a round turn actually is
A round turn is one complete trade: in and out. Futures brokers quote commissions this way by convention — a rate per round turn already covers both sides. Stocks and forex do not use the term, but the arithmetic is identical, because you pay to get in and you pay again to get out.
The reason to think in round turns rather than per side is that it is the unit your edge is measured in. A setup that makes eight ticks and costs three ticks to trade is a very different business from the same setup costing half a tick.
How the two charging models work
| Commission | Spread | |
|---|---|---|
| How you pay it | Billed as a separate fee | Embedded in the price you get |
| Visible on a statement | Yes, as a line item | No, never itemised |
| Varies with volatility | No — fixed per contract or share | Yes — widens when liquidity thins |
| Who sets it | Your broker | The market, or the dealer quoting you |
| Typical of | Futures, professional equities | Retail forex, CFDs, some equity models |
Neither model is inherently cheaper. A commission-plus-raw-spread account and a zero-commission wider-spread account can arrive at the same total, and the only way to know which is which is to add both components on the instruments you actually trade.
Stocks: where "free" went
Zero-commission equity trading did not delete the cost, it relocated it into the execution price. Regulators know this, which is why execution quality is measured separately from fees. The SEC adopted amendments to Rule 605 of Regulation NMS on March 6, 2024, expanding who must publish monthly execution quality reports and adding new statistics — including average effective spread divided by quoted spread and size improvement measures (SEC, press release 2024-32).
That ratio is the most useful idea in this article. Effective spread measures what you actually paid relative to the midpoint at the time of your order, rather than what was advertised. A ratio below 1 means orders are, on average, being filled better than the displayed quote; a ratio near or above 1 means they are not.
The compliance date for those amendments was pushed back once, from December 14, 2025 to August 1, 2026 (SEC, Disclosure of Order Execution Information). In practice that means the comparable, standardised execution-quality reports are only now beginning to appear — and they are the first genuinely apples-to-apples way retail traders have had to compare what a "free" broker really charges.
Futures: the itemised model
Futures are the most transparent of the three because almost everything is itemised. A round turn typically carries a broker commission, an exchange fee, a clearing fee and an NFA regulatory fee, all quoted per contract. On top of that you cross the bid-ask, which in the deepest contracts is usually one tick.
To turn that into money you need the tick value for your contract — the arithmetic is in tick value explained, and the size implications in E-mini vs Micro E-mini futures. The key structural point: because fees are per contract and the spread is one tick regardless of your size, cost per contract is roughly constant while the fixed cost of the spread is not. Trading one micro contract means the spread is a far larger share of a smaller potential gain.
Forex: the dealer is your counterparty
Retail forex is where the spread does the most work, because in the off-exchange market the firm quoting you is generally the other side of your trade rather than an agent routing it to an exchange. That is a genuinely different business model, and it is regulated as one: the CFTC requires retail foreign exchange dealers to meet a minimum net capital requirement of $20 million, plus additional amounts scaled to their obligations to retail customers (CFTC, Foreign Currency Trading).
Practically, this means comparing forex accounts on the advertised spread alone is a mistake. Compare on the spread at the hours you trade — an "average" that includes the London session tells you nothing about what you will pay at 2am — and check whether the account is raw-spread-plus-commission or all-in. The mechanics are unpacked in what is the spread in forex and, for overnight holds, what swap is.
How to total your own cost per round turn
- Commission, both sides. Take the actual rate on your statement, not the advertised one.
- Exchange and regulatory fees — itemised in futures, bundled elsewhere.
- The spread you crossed, in ticks or pips, converted to dollars at your size.
- Your measured slippage, from the method in slippage in trading.
- Divide the total by your average winning trade. That percentage is how much of your edge is spent before you have made a single good decision.
Most traders have never calculated step 5, and it is the one that changes behaviour. If costs consume a quarter of the average winner, the fastest available improvement is not a better indicator — it is fewer, better trades.
What to actually ask a broker
- What is my all-in cost per round turn on the instrument I trade most? One number, both sides, everything included.
- Is the spread raw or marked up? A firm that adds to the raw spread and also charges commission is charging twice.
- What is the typical spread in the hours I trade? Averages hide the hours that matter.
- Where can I see your execution quality reports? For US equities this is a documented obligation, not a favour.
- Do fees change with volume, and at what threshold? Worth asking before you scale, per how to scale up position size.
Frequently Asked Questions
What is the difference between commission and spread?
Commission is a fee your broker bills you separately for executing the trade. The spread is the gap between the bid and the offer, so it is paid inside the price rather than charged to you as a line item. Commission is visible on a statement and the spread never is, but both leave your account by the same amount and should be added together.
What is a round turn?
A round turn is one complete trade: getting in and getting back out. Futures brokers usually quote commissions per round turn rather than per side, so a quoted rate already covers both the entry and the exit. In stocks and forex the same idea applies even when it is not named, because you pay the cost twice per trade.
Is zero-commission trading actually free?
No. Removing the commission line does not remove the cost; it moves it into the execution price. That is why regulators measure execution quality separately. The SEC adopted amendments to Rule 605 of Regulation NMS on March 6, 2024 requiring new statistics including average effective spread divided by quoted spread, with a compliance date of August 1, 2026.
How do I work out my true cost per round turn?
Add three things: the commission for both sides, the spread you crossed measured in ticks or pips and converted to dollars, and any exchange or regulatory fees. Then add your measured slippage. That total, compared against your average winning trade, tells you how much of your edge is consumed before you have made a single decision.
Bottom line
Commission and spread are one expense split across two places, and only one of them sends you a bill. Total both — plus fees, plus your measured slippage — into a single cost per round turn, then express it as a share of your average winner. That single percentage explains more about why marginal traders stay marginal than any indicator setting will. It also tends to point at the same fix as everything else in the risk-first approach: fewer trades, planned levels, and targets with enough room to survive the toll. Start with how to choose a broker for day trading, then put the number into trading expectancy and see what is left.