A commission is what you pay an intermediary for handling a transaction. On shares, brokers often charge a percentage of trade value, a flat fee, or a mix. High commissions eat returns, especially if you trade often in small sizes.
Key takeaways
- Always add commissions when you calculate true purchase cost and net sale proceeds.
- Fee structures differ; compare total cost, not only the advertised rate.
- Some platforms bundle commissions into spreads instead of separate line items.
- Low fees never justify a reckless trading strategy.
Why it matters in Ethiopia
New ESX investors should ask brokers for a clear fee schedule before trading. Understanding commission drag early prevents surprises when small gains disappear after costs.