When brokers charge fees on trades, those fees are usually calculated one of two ways. One way is by charging a percentage of the overall trade amount; i.e., a 10% fee on a $100 trade would be ten dollars. The other way is via a flat dollar fee, which is the same regardless of the trade amount. So if our broker charges a flat dollar fee of $5 per trade, we pay $5 per trade, regardless of whether we’re trading five bucks or five million bucks.
Obviously, if we’re only trading five dollars, a flat dollar fee of five dollars isn’t our most economical choice. But if we’re trading a lot more than that in a given transaction, a flat dollar fee might end up saving us a ton of commish over a percentage fee.
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Finance: What is commission?112 Views
finance a la shmoop. what is commission? well it's the greatest motivator for
salespeople in the world. it's the money some people make above and beyond their [ commission explained on a large screen]
salary. a little monetary carrot dangling out in front of a salesperson to you
know encourage them to sell sell sell. alright you're an agent who just sold a
house good for you. you get a 3% Commission. the house went for a million
bucks well you get 30 grand for the privilege or at least your brokerage
does, and then you get some piece of that. ok now you're the stock broker who sold
3 million shares of stock. well good for you
you get four cents a share in Commission 120 grand in the pocket of your
brokerage and you get some piece of that Commission. you're the Hollywood agent[equation]
who just inked Brad pitiful into a movie deal worth 20 million bucks, well good
for you your agency gets a 10% commission or two
million dollars. yeah that's for a Dewey Cheatham and Howe agency best one in
Hollywood. yeah they rep Harvey Weinstein. now for someone who's attempting to sell
a polished version of that Harvey Weinstein story well that's a commission
impossible. [man frowns]
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