Commissions

Hi all,

in the commissions page of a futures broker I found 2 types of commissions:

- per side
- per round trip

what do they mean?
at which should I look at and why?

thanks in advance

Per side it means for taking a position, opening or closing a trade.

Per round trip it means for opening and closing a position.

Lubo.

I'm sorry but I didn't get it...could you rephrase please?

What matters is round turn, which is twice each side. If you buy a stock and plan to keep it 10 years, the broker wants his commission for that one side immediately. However, if you day trade futures, the broker may quote you a price in round-turn, expecting you to open and then close the position in a short period of time. It's just a way to quote, I prefer to hear a quote in round-turn, that's my total cost. Some devious brokers (maybe there are a few) will quote the one-side and sorta imply that that is your price, - well it is your price going in, and it is also your price coming out. Double-whammy. Another reason for the one-side quote is for commercials that may actually take delivery of the commodity, so they have no exit commission (altho, there are probably other fees - say to store 5000 bushels of wheat).
ps: Another thing to watch for: commission quotes might include nfa and exchange fees, or they might not. You always have to ask.

Either way, you're paying commission for opening the trade and commission for closing the trade.

For example, most equity brokers charges $9 to trade. Thats, $9 for executing an opening the trade and $9 for executing the closing of that position. Whether the trade was profitable or not, you'll have to pay $18 for that trade. With forex, you'll also have to pay the spread, addition to commission.

Futures contracts also have a spread as well as commission but normally its pretty low, for most index contracts its about 1 point and for forex it varies but tends to be comparable to a good ECN broker