Definition. The costs associated with every futures trade: the broker's commission, exchange and regulatory fees, as well as platform and data costs.
How it works
The transaction cost is usually charged per contract when opening and closing a position. On top of that come fixed monthly costs, e.g. for market data and the platform.
Example
On micro contracts, transaction costs can be a significant part of a typical small price move. With frequent trading they add up quickly.
What to watch out for
Costs reduce a method's expectancy. It's worth including them in your journal and backtests. Check current rates with your broker.
You'll find the full explanation with graphics, examples and exercises in the 📖 Order flow encyclopedia space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
