How is percentage-based trading commission calculated?

When trading CFDs, commission for certain instrument groups is charged as a percentage. Therefore, the final commission amount depends on the value of the position being opened.

The following formula is used:

Commission = Instrument Price × Contract Size × Volume in Lots × Commission Rate

Commission rates:

Indices — 0.004%
Crypto CFDs — 0.4%
Commodities — 0.02%
Stocks — 0.25%

Let’s look at two examples

Example 1: AUS200

Suppose a trader opens a 1-lot position with the following parameters:

AUS200 price — 8,668.4 AUD
Contract size — 1
Commission — 0.004%

First, we calculate the position value:

8,668.4 × 1 × 1 = 8,668.4 AUD

Then we apply the commission rate:

8,668.4 × 0.004% = 0.346736 AUD

Since the instrument is denominated in AUD and the trading account is in USD, currency conversion is required. At an AUDUSD exchange rate of 0.71313:

0.346736 × 0.71313 = 0.2473 USD

After rounding, the commission is 0.25 USD.

Example 2: DOGUSD

Now let’s consider a Crypto CFD:

DOGUSD price — 0.07999 USD
Contract size — 100,000
Volume — 1 lot
Commission — 0.4%

Position value:

0.07999 × 100,000 × 1 = 7,999 USD

Commission:

7,999 × 0.4% = 31.996 USD

After rounding, the commission is 32.00 USD.

No additional currency conversion is required in this example because the instrument value and the trading account are both denominated in USD.

What should traders keep in mind?

Percentage-based commission is calculated based on the position value rather than the deposit amount or margin used.

Therefore, four main parameters should be considered: instrument price, contract size, position volume, and commission rate. If the calculation currency differs from the account currency, the applicable conversion rate should also be taken into account.

Understanding the calculation in advance can help traders assess their trading costs and factor them into their trading decisions.