Commission inflation is a deceptive practice where brokers charge excessive, hidden, or manipulated commissions on trades—far beyond what is standard or justifiable. While commissions are a normal part of trading costs, especially with ECN and STP brokers, inflated commissions can silently erode a trader’s profits or even turn a winning strategy into a losing one.

This article explores how commission inflation works, why it’s used as a scam tactic, and how traders can protect themselves from falling victim.

What Is Commission Inflation?

Commission inflation occurs when a broker:

• Charges higher-than-average fees per trade while advertising low costs
• Adds hidden commissions on top of spreads or swaps
• Bundles fees into misleading “all-inclusive” pricing
• Applies inconsistent commission rates, varying by trade size, time, or instrument

This is often disguised through complex fee structures, making it hard for traders—especially beginners—to spot the real cost of trading.

How the Scam Works

1. Advertising Low Trading Costs

Scam brokers lure clients in with claims like “ultra-low spreads” or “commission-free trading,” but fail to mention inflated commissions added on the backend.

2. Hidden Fee Structures

Traders are charged commissions that aren’t clearly disclosed or are buried in fine print. Some brokers charge per side, while claiming it’s per round-turn.

3. Inconsistent Billing

Commissions may change between instruments or even between trades, with no prior notice. In some cases, traders don’t realise they’re being overcharged until they compare with other platforms.

4. Manipulated ECN Models

Some “ECN” brokers actually route orders through internal systems, applying both spread markup and inflated commissions, resulting in double charging.

Why It’s So Harmful

• Slow financial drain: Inflated commissions add up over time, reducing overall profitability.
• Misleading cost structure: Traders can’t properly calculate break-even or risk-reward ratios.
• Unfair competitive disadvantage: Scalpers and intraday traders suffer the most, as costs per trade matter more in high-frequency strategies.
• Lack of transparency: Traders lose trust and are less able to manage risk effectively.

Industry-Standard Commission Rates

To help spot abnormal commissions, here are typical benchmarks for legitimate ECN/STP brokers:

Account Type	Standard Commission (per round-turn, 1 lot)
ECN Account	$6.00 to $7.00 per 1.0 lot
Raw Spread	$3.00 to $3.50 per side ($6.00 to $7.00 total)
STP/Standard	Commission often built into spread

If you’re being charged significantly more than this—or you can’t find exact figures—it may be a sign of commission inflation.

Red Flags of Commission Inflation

• No clear breakdown of commission rates on the broker’s website
• “Commission-free” claim but extremely wide spreads
• Unexplained differences in trade costs when trading similar positions
• Complex or hidden fee tables that aren’t user-friendly
• Platform charges higher than advertised once trading begins

How to Protect Yourself

1. Use Regulated Brokers

Stick with brokers licensed by FCA, ASIC, or CySEC, which are required to disclose all fees clearly and transparently.

2. Read the Fine Print

Look for full commission disclosures in account specifications or terms of service. Ask customer support to clarify if it’s vague.

3. Compare Brokers

Check commission rates across multiple platforms. If one broker is significantly more expensive without offering added value, that’s a warning sign.

4. Use a Trade Journal

Track your commissions in detail. Over time, you’ll see whether fees are eating into your profits more than expected.

5. Avoid “Too Good to Be True” Offers

Zero-commission trading usually means you’ll pay in other ways—often through spread markups or hidden fees.

Trusted Education Can Help

Knowing how brokers profit—and how to calculate real trading costs—is essential for all traders. Traders MBA offers expert trading courses that include modules on broker models, cost breakdowns, and trading efficiency to help you maximise profits and minimise hidden fees.

Explore their trading courses here to build smart trading habits that last.

Conclusion

Commission inflation is a silent killer of trading profitability, especially for active traders. While small on the surface, inflated or hidden commissions can devastate long-term gains. By choosing transparent brokers, understanding true trading costs, and educating yourself on pricing structures, you can stay in control—and out of hidden traps.