What is Commission in Forex Trading? A Complete Guide for Malta Traders (2026)

What Exactly is Forex Commission?

Commission is a per-trade fee that brokers charge for executing your order. It is separate from the spread (the difference between bid and ask price). For Malta retail traders, commission is most common on ECN (Electronic Communication Network) accounts, where spreads are very low (e.g., 0.0–0.5 pips) but a fixed commission applies per lot traded. A standard lot is 100,000 units of the base currency.

How Commission Works in Malta

When you open a trade with an MFSA-regulated broker, the commission is calculated in USD per lot. For example, if your broker charges $5 per lot per side (round turn = $10), and you trade 2 lots of EUR/USD, your total commission is $20. This is deducted from your account when the trade is closed. If the trade moves 10 pips in your favor, your net profit is 10 pips minus the commission cost (approximately 2 pips for 2 lots).

Why Commission Matters for Malta Traders

Malta traders often use Bank Transfer or Skrill for deposits, which may have additional fees. Combined with trading commissions, these costs can erode profits. For example, a trader using USDT (crypto) might face network fees on top of broker commission. The MFSA mandates that brokers provide a detailed breakdown of all charges, including commission, in the account opening agreement.

Commission vs. Spread – Which is Better?

For Malta traders, the choice depends on trading style. Scalpers prefer low spread + commission (ECN accounts) because they trade frequently. Swing traders may prefer commission-free accounts with wider spreads. Always calculate total cost in USD: (spread in pips × pip value × lots) + commission.

For Malta traders, commission costs are influenced by local payment methods. Bank Transfer deposits are free but may take 1–2 days, while Skrill offers instant deposits with low fees (1%–2%). USDT (Tether) deposits are fast but incur blockchain network fees (typically $1–$5 per transaction). These costs add to your trading expenses. The MFSA (Malta Financial Services Authority) regulates all forex brokers operating in Malta, ensuring they segregate client funds and disclose commission structures clearly. Malta traders should always verify a broker's MFSA license number on the regulator's official website. Additionally, Malta's tax regime treats trading commission as a deductible expense for professional traders, reducing taxable income. However, casual traders should keep records of all commission payments for tax reporting.

1. Choose an MFSA-Regulated Broker
   Select a broker licensed by the Malta Financial Services Authority. Verify their license on the MFSA website. Ensure they offer transparent commission schedules in USD.
2. Open an ECN Account
   ECN accounts typically charge low commission per lot (e.g., $3–$7 per side). Complete the application with your ID and proof of address (Malta utility bill).
3. Fund Your Account via Skrill or Bank Transfer
   Deposit USD using Skrill (low fees) or Bank Transfer (free but slower). Avoid USDT if network fees exceed your trading budget.
4. Calculate Total Trade Cost
   Before entering a trade, compute: (spread in pips × pip value × lots) + (commission per lot × lots). Ensure this is less than 0.5% of your account balance.

Commission vs. Markup: Some brokers charge no commission but add a markup to the spread. For Malta traders, a markup of 1 pip on a major pair costs $10 per lot, while a $5 commission with 0.0 pip spread costs $5. So commission accounts are cheaper for large trades. However, for micro lots (0.01 lot), a $5 commission is $5 per trade, which is very high. Always match your account type to your trade size.

When you place a trade with an ECN broker, the commission is automatically calculated based on the lot size. For example, a Malta trader deposits $5,000 via Skrill and trades 1 lot of EUR/USD with a $5 per side commission. When the trade is opened, $5 is reserved; when closed, another $5 is deducted. The broker's platform shows this in the trade history. The commission is paid to the broker for providing liquidity access. In Malta, the MFSA requires brokers to display commission in the contract terms before you trade.

Example 1: Maria from Malta funds her account with $10,000 via Bank Transfer. She trades 2 lots of GBP/USD. Her broker charges $6 per lot per side. Total commission = 2 lots × $6 × 2 sides = $24. The trade moves 15 pips in her favor, earning $300. Net profit = $300 – $24 = $276.

Example 2: John uses USDT to deposit $2,000. He trades 0.5 lots of USD/JPY. Commission = 0.5 × $5 × 2 = $5. He also paid $2 USDT network fee. His total cost is $7. He must ensure the trade moves at least 1.4 pips to break even.

The Malta Financial Services Authority (MFSA) regulates forex brokers under the Investment Services Act. MFSA-licensed brokers must segregate client funds, provide clear commission schedules, and adhere to leverage limits (e.g., 30:1 for retail clients). For Malta traders, this means your funds are protected if the broker becomes insolvent. The MFSA also requires brokers to disclose all fees, including commission, in the contract for differences (CFD) agreement. Always check the MFSA's official register before depositing. If you have a dispute, the MFSA offers a consumer complaints procedure.

• Compare Total Cost: Always compare spread + commission in USD. A broker charging $3 per lot but 0.5 pip spread may be cheaper than one with $0 commission but 1.5 pip spread.
• Use Skrill for Low Fees: Skrill deposits are fast and cost-effective for Malta traders. Avoid credit cards that add cash advance fees.
• Negotiate Commission for High Volume: If you trade over 50 lots per month, ask your broker for a volume discount. Some MFSA brokers offer $2–$3 per lot for high-volume clients.
• Track Commission as Expense: Keep a spreadsheet of all commission payments. In Malta, professional traders can deduct these from taxable profits.
• Avoid USDT for Small Accounts: USDT network fees ($1–$5 per deposit) can eat into small accounts. Use Bank Transfer or Skrill instead.

Commission is a key cost in forex trading for Malta residents. By choosing an MFSA-regulated broker, funding via Skrill or Bank Transfer, and calculating total trade costs, you can minimize expenses. Remember to track commission for tax purposes and negotiate volume discounts if you trade frequently. Start by opening a demo account to compare commission structures. For further reading, check our broker comparison tool for Malta-specific recommendations.