Trading Fees
Trading fees are platform charges for executing trades. Fees add to execution costs and should be measured separately from effective spread.
Definition
Trading fees are charges imposed by a platform when you execute trades. Depending on the platform, fees can be per contract, a percent of notional, or follow other rules.
Why it matters
Fees increase your all in trading cost. Even if your effective spread is low, fees can make small edges unprofitable, especially in bounded price markets.
How to think about fees
• Keep effective spread as a pure microstructure metric (no fees).
• Add fees separately to compute all in cost.
Common pitfalls
Ignoring one side fees: Fees can apply to both entry and exit.
Comparing markets without fees: Two markets can have the same spread but very different net costs if fee schedules differ.