Volume-tier commission and when it actually kicks in

[Fairman]

Volume-tier commission and when it actually kicks in

Some brokers advertise commission rates that drop with monthly volume, such as 7 dollars per lot round turn at the start and 4 dollars above a certain threshold. Scalpers generate large volume, so the lower tiers seem easily reachable. The details deserve a closer look.

First, check whether tiers are calculated per month, per rolling thirty days, or lifetime. Second, see if the discount applies retroactively to the whole month or only to lots past the threshold. Third, confirm whether volume from all accounts counts or only that account.

The difference can be big. A retroactive discount at 500 lots means a rebate at the end of the month. A non-retroactive one only helps later trades.

Also verify how volume is counted. Some firms count each side of a trade, others count full round turns, and the same activity can be one number or double.

Ask for the policy in writing and run the numbers. A tier that looks generous may be unreachable at the actual trading size.

Has anyone clearly benefited from a volume tier, and how long did it take to qualify?

[Amanhasnoname]

I looked at a volume tier on an ECN account a couple of years ago and the headline numbers were misleading. The broker advertised a drop to 4 dollars per lot above 300 lots a month, but the discount only applied to lots past the threshold, so it was not retroactive. With my typical monthly volume of about 380 lots, I paid the lower rate on only a small slice.

The other detail was what counted as volume. They counted each side separately, so my 380 round turns were reported as 760, and I had passed the threshold much earlier than I realised. I only found this out by asking support for the exact calculation, and they sent me a short written reply.

My advice is to simulate three months of your own trading against the tier table before you pick a broker for it. In my case the real saving turned out to be around 8 percent of commission, which was worth having but not life changing.