Fee drag calculator: the yearly cost of trading often

How High Trade Frequency Quietly Erodes Compounding

A $6.00 round-trip cost (including commission, spread and taxes) looks tiny on a single trade, so charting terminals rarely highlight it. However, if you place 20 trades a month (240 trades a year) on a $10,000 account, you pay $1,440 per year in direct friction—an automatic 14.4% annual hurdle rate before you make a single dollar of net gain. Use this calculator to compare active turnover drag against lower-frequency swing setups.

How the calculator works

The second part of the result compares two simple paths: your gross return compounding on its own, and the same return with the yearly cost drag taken off every year. It is a rough model: in real life costs come out trade by trade and your capital changes during the year, but it shows the size of the effect clearly.

Worked example

An account of $10,000 pays $6 per round trip (commission, spread and slippage together) and trades 20 times a month. That is $6 × 20 × 12 = $1,440 a year, or 14.4% of the account. Before the trader makes a single cent of net profit, the strategy has to earn 14.4% a year just to cover costs. At 10 trades a month the drag halves to 7.2%; at $3 per round trip and 10 trades a month it is 3.6%.

Ways to reduce fee drag

• Trade less often, or only the setups with the clearest edge.
• Use wider stops and targets so each trade’s costs are a smaller share of the move. The Trade Planner shows costs in R for every trade.
• Compare your broker’s total costs, not just the headline commission: spreads, currency conversion and platform fees count too.

Frequently asked questions