Brokerage fees and trading costs explained

A trade can have more than one cost

Brokerage is the fee a trading platform may charge when you buy or sell an investment. Some charge a flat amount, others a percentage, and some offer free trades under certain conditions. “A$0 brokerage” doesn’t necessarily mean there are no other costs.

The bid-ask spread

Markets commonly show a buying price and a selling price. The difference is called the spread. It is a trading cost that is especially worth understanding for less liquid products or during periods of unusual market conditions.

Other costs to investigate

Depending on the platform and investments, there may be foreign-exchange conversion charges, account or custody fees, inactivity fees, fund management costs and transfer or withdrawal charges. Check the current fee schedule directly with the provider rather than relying on a comparison article that might be out of date.

Why trade size matters

A $5 fee is 1% of a $500 trade, but only 0.1% of a $5,000 trade. That arithmetic does not automatically tell you how often to invest: time out of the market, cash availability and other considerations matter too.

Try our investment frequency calculator to understand the simple annual brokerage-cost side of the question.

Compare providers fairly

When comparing a trading platform, check who legally holds the assets, which markets and products it supports, whether the fee schedule applies to your trade type, service accessibility and what happens if you want to transfer away. This site does not rank or recommend particular brokers.

A simple trading-cost example

If a platform charges a hypothetical flat $6 for each trade, paying $6 to buy $300 of securities is 2% of the trade amount. Paying the same fee on a $3,000 trade is 0.2%. The platform fee is unchanged, but its relative effect is very different.

That observation does not imply that larger, less frequent trades always produce a better overall result. The money waiting between trades, the product involved and other costs change the picture.

A platform comparison worksheet

• Which legal entity provides the trading service?
• Which markets, funds and account types are available?
• What is the fee schedule for the exact trade size and asset?
• Are international shares subject to currency charges?
• How are assets held, and how do transfers work?
• What documents explain account safeguards and complaints?

Use the same assumptions for every candidate and record the date on which you verified the figures. Broker costs change too often for a static article to be a dependable source of live prices.

What to check before the first trade

Write down a realistic trade amount, such as A$250, and look up the fee for buying and later selling that amount. Add any account, transfer and foreign-currency charges. Check the difference between the current buy and sell quotes if possible. You can use our brokerage calculator to compare flat fees across trade sizes.

The cheapest-looking trade isn't necessarily the best account if the broker doesn't offer the investments or account structure you need.