How To Lower Trading Commissions: 6 Top Tips

Written By
Julija A.
July 09,2023

Investing is now more accessible than ever thanks to online platforms. But while smarter investments can be the perfect way to build your net worth at a faster rate than inflation, millions of traders around the globe have fallen victim to high commissions.

Whether you’re just starting out or looking to improve your strategies, this guide on how to lower trading commissions could help you achieve far better outcomes.

Does Lowering Commissions Really Matter?

As a trader, learning to reduce trading commissions could be one of the most important ways to get the best ROI from your portfolio. 

You can research brokerage fees and fee types for hours, but it only takes a little math to understand why commissions demand your attention. The commissions traders take range wildly, but let’s imagine your broker takes 5% of every trade. In that case, if you were to make a trade worth $1,000, you’d instantly lose $50 every time. 

Cutting trade commissions to 2.5%, for example, would instantly save you $25. If you were to make, say, $10,000 worth of trades annually, halving your commissions from 5% to 2.5% would save you $250.

6 Tips for Saving Money on Trade Commissions

Knowing that you want to pay less is one thing, but actually making that happen is another. Here are six of the best ways you can reduce your trading fees for immediate and ongoing rewards.

Find a New Broker

The first step to reducing your broker fees is quite simply to find a trading platform with fair prices. It’s very easy to be won over by snazzy TV commercials or online PPC ads, but that doesn’t necessarily mean that a platform or broker is the best option to manage your portfolio and future trades.

There can be a significant contrast in commission fees between two different brokerage platforms even when they focus on the same strategy, so it’s imperative that you read and understand the proposed fees. Meanwhile, this is a good time to confirm that the broker offers access to the commodities that you wish to invest in.

In addition to trade commissions, it’s important to investigate any fees on deposits and withdrawals. In some cases, your chosen payment method could affect the costs. It is another issue to consider when finding a platform that aligns with your needs.

Change Your Broker Commission Structure

Finding a fair broker is one thing, but it’s also important to select a broker commission style that suits your style of trading. Around 58% of Americans hold stocks, but many do not realize that switching between per-trade commissions and per-share commissions could make a huge difference to their capital gains.

A pay-per-trade commission means that the fee charged is a fixed rate for each trade, regardless of how many shares you buy. Conversely, a per-share method means that the fee is determined by how many shares you purchase, rather than the transaction itself. So, if you’re only trading a small number of shares, the latter is probably the better option.

Likewise, day traders who are in and out of trades may find that this method works best for them. Conversely, a set per-trade commission is ideal if you’re trading infrequently with large volumes in each trade.


Trading through automated broker platforms is a popular method used by millions of investors. However, working with a human broker is still a relevant strategy. When taking this route, there may be an opportunity to negotiate a lower commission rate simply by asking about possible discounts.

You’re unlikely to be able to negotiate a lower commission during the first year. Once that opening 12 months has concluded, though, you can show how much business you’ve given the broker and ask for a reduced commission structure. The broker may accept a bid to keep you as a customer over the years to come.

Negotiations won’t always work, even after you’ve established loyalty. Still, negotiating a 10% saving on the cost per trade could potentially save you thousands of dollars during your lifetime, not least because it’s common for the average person to invest up to 15% of their salary.

Avoid Overtrading

To become a successful trader, you have to accept that a large percentage of your time will be focused on survival and avoiding the red rather than constantly hitting green, which is why avoiding unnecessary losses is a key part of a winning strategy. As such, it’s best not to overtrade, regardless of which commission structure you’re on.

Overtrading on a per-trade structure will naturally see your funds swallowed by commissions. Chasing losses is another form of overtrading that only leads to further losses and commissions. Writing out a trading plan ahead of time - including your profit goals and entry price - facilitates smarter trading habits that include fewer commission fees.

Additional steps may include setting a daily stop-loss figure, which will prevent you from chasing unnecessary trades, and simply walking away from your computer or smartphone trading app. Staying flat and avoiding further losses in commissions is better than losing on risky trades. 

Try an Online Broker 

Using an electronic communication network (ECN) allows you to submit buy or sell orders for much lower fees, making it a great way to reduce your overall commissions. This gives you an added incentive to create a market for your securities.

ECNs, also known as auto- or robo-brokers, remove the element of human error from trading. Because the companies behind this technology don’t have to pay large salaries to Wall Street traders, they can allow you to trade for a fraction of the commission you’d otherwise pay. 

Aside from effectively saving you money on trading fees, robo-brokers ensure that your orders get filled automatically according to prices you set. This means you can set up sell orders for when the stock is spiking and buy orders when its price is dipping. This is the perfect approach for most trading strategies.

Consider a Zero-Fee Broker

What’s better than trading with an ECN? Using zero-fee brokerage service, which will reduce the cost of commissions to nil. Of course, nothing in life comes for free; these companies make their money elsewhere, which is why you must consider the pros and cons before choosing this option.

As well as taking no commission, many of these platforms don’t charge deposit fees either. So, what’s the catch? Well, you may find that the assets you buy cost more than they would with other brokers. Therefore, it’s important to conduct your research on what stock you’re buying and how many shares you want. In some cases, the minor price hike will be less than the commission you’d pay elsewhere.

Even when it’s not, the good news is that zero-fee brokers make it easier to track your trading activities and understand your true ROI rather than face the nasty surprise of an excessive commission fee you forgot to account for. As with all of the options, the key is to find what works best for you.

In Conclusion

Knowing how to lower trading commissions will help you unlock the full potential of investments. Nevertheless, you should always budget for commissions before starting any trading strategy. This will help you gain a better understanding of what to expect and how to maximize your ROI.


How do you avoid commissions?


Commissions can now be avoided by choosing a zero-fee broker. However, the downside of this is that the assets you purchase may have a higher share price. So, you may find that a traditional per-trade or per-share commission model suits your trading needs better.

How can I reduce my ECN fees?


While some ECN fees are inevitable, adding liquidity by placing orders a couple of pennies out from the bid or ask spread allows you to avoid a portion of the fees, making it an excellent way to reduce your trading commissions. 

How much is the average trade commission?


Trade commissions can vary greatly from one broker to the next based on a range of factors. The biggest factor will be whether or not you opt for a per-trade or per-share commission structure. If, for example, you have to pay a flat $10 per-trade commission and you make a trade worth only $20, you’ll essentially be paying a 50% commission. But if you make a trade worth $1,000, you’re only paying a 1% commission. With the right strategy and the knowledge of how to lower trading commissions, you can optimize your ROI.

How do I buy stocks without paying a fee?


You can now buy stocks without paying a direct fee through zero-fee platforms. While that sounds great, you need to consider the pros and cons of this path, as these traders usually sell assets at higher prices. The volume and frequency of your trades will determine the best path.

About author

Albert Einstein is said to have identified compound interest as mankind’s greatest invention. That story’s probably apocryphal, but it conveys a deep truth about the power of fiscal policy to change the world along with our daily lives. Civilization became possible only when Sumerians of the Bronze Age invented money. Today, economic issues influence every aspect of daily life. My job at Fortunly is an opportunity to analyze government policies and banking practices, sharing the results of my research in articles that can help you make better, smarter decisions for yourself and your family.

More from blog