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Commission model

The explicit fee schedule applied in the backtest: per share, per contract, percentage of notional, or tiered, plus exchange and regulatory fees.

Structures differ enough to change which strategies are viable. Per-share pricing punishes low-priced stocks; percentage pricing punishes expensive ones; per-contract futures pricing makes small positions uneconomic. Model the schedule you will actually be billed under.

Do not forget minimums and floors. A $1 minimum per order makes a 20-share test position cost 0.5% in fees, which is why small accounts cannot run strategies that assume institutional cost structures, no matter how good the signal.

Also include the small mandatory charges: exchange fees, clearing, regulatory levies on sales, and market data subscriptions amortised across expected trade count. For a high-turnover retail strategy these often exceed the commission itself.

Related: transaction-cost-modelling, slippage-model, turnover, capacity

Educational only, not advice. Spotted an error? Post in Site Feedback.