
{/* banner prompt: Cinematic realistic photograph, 16:9 wide banner composition: a pile of coins on a desk with a small portion being steadily swept away by a hand holding a thin brass ruler, a calculator and a printed trade statement blurred in the background, soft morning light. Muted teal and warm amber colour grade, soft natural light, shallow depth of field, high detail, photorealistic, no readable text, no numbers, no logos, no visible faces. */}

This is part ten of the [ASX order book series](/blog/2026/10/12-reading-the-asx-order-book-how-intraday-traders-actually-find-edge/). The [previous post](/blog/2026/10/21-win-rate-vs-payoff-two-shapes-of-a-profitable-trader/) showed that a harvester-style trader can make more per month than a sniper, because volume multiplies a small edge. This post is about the catch.

Every one of those trades pays brokerage. And the spread. And a bit of slippage. For a trader who makes many small trades, those costs aren't a rounding error. In the early months of several journals I read, they were **roughly half of gross profit**.

<KeyPoints>

- Track commissions as a share of gross profit. Early on it can be half your edge.
- On the ASX, the cost of a round trip in ticks depends heavily on share price.
- The biggest lever is fewer, better trades, not a cheaper broker.

</KeyPoints>

## The metric nobody looks at

Most people look at net profit. The more useful metric for an active trader is:

```text
cost share = commissions / gross profit
```

If you made $10,000 gross and paid $5,000 in brokerage, your cost share is 50%. Half your edge went to your broker. Change your setup quality slightly for the worse, or your broker slightly for the more expensive, and you're a losing trader.

Across the journals, the cost share told the story of each trader's development better than net profit did:

<Table data={
    {
        headers: ['Stage (synthetic composite)', 'Cost share', 'What was going on'],
        rows: [
            ['First year', '40% to 55%', 'Too many trades, small edge per trade, small size'],
            ['Specialising', 'About 25% to 35%', 'Fewer, better trades. Still a high-turnover style.'],
            ['Mature', 'About 10% to 15%', 'Bigger average win, selective, cheaper execution'],
        ]
    }
} />

The cost share fell not because brokerage got much cheaper, but because the **edge per trade grew**. That's the real lesson. You can't commission-shop your way to profitability, but you can trade your way to a cost share that no longer matters.

## Ticks, price and percentage costs

Here's where the ASX's tick size schedule becomes important. Brokerage is usually charged as a percentage of value (or a flat fee that behaves like one at scale). Price moves happen in ticks. So the cost of a round trip, measured in ticks, depends heavily on the share price.

Assume a round-trip brokerage of 0.10% of value (0.05% each way), which is in the range many active traders pay. Here's the cost in ticks:

<Table data={
    {
        headers: ['Share price', 'Tick', 'Tick as % of price', 'Round-trip cost at 0.10%', 'Cost in ticks'],
        rows: [
            ['$0.20', '0.5c', '2.50%', '0.10%', '0.04 ticks'],
            ['$0.80', '0.5c', '0.63%', '0.10%', '0.16 ticks'],
            ['$1.90', '0.5c', '0.26%', '0.10%', '0.38 ticks'],
            ['$2.50', '1c', '0.40%', '0.10%', '0.25 ticks'],
            ['$10.00', '1c', '0.10%', '0.10%', '1.0 tick'],
            ['$40.00', '1c', '0.025%', '0.10%', '4.0 ticks'],
        ]
    }
} />

On a $40 stock, you need to make four ticks just to pay for your round trip. On a $0.80 stock, a single tick pays for it six times over. This is why so many scalpers concentrate on lower-priced stocks with large tick sizes relative to price, and why several journals noted that trading high-priced stocks increased their turnover and commissions without improving results.

That's not a rule against large caps. Large caps can offer liquidity and size. But a scalping style that works in a 50 cent stock doesn't automatically work in a $40 stock, because the cost structure is completely different.

## The spread is a cost too

If you enter by paying the offer and exit by hitting the bid, you pay the spread on top of brokerage. In a stock where the spread is one tick, a "two tick win" measured from your entry might only be one tick from the mid. Many backtests and many mental models forget this.

Add slippage (the difference between the price you wanted and the price you got) on fast-moving opens, and the true cost of a scalp can be well above the headline brokerage.

## Rough arithmetic for one trade

A synthetic example: you buy $50,000 of a $2.00 stock and sell two ticks higher.

<Table data={
    {
        headers: ['Item', 'Amount'],
        rows: [
            ['Shares', '25,000'],
            ['Gross profit (2 ticks at 1c)', '$500'],
            ['Brokerage at 0.05% each way', '$50.25'],
            ['Net profit', 'about $450'],
            ['Cost share', 'about 10%'],
        ]
    }
} />

Now the same $50,000, same two-tick win, in a $20 stock:

<Table data={
    {
        headers: ['Item', 'Amount'],
        rows: [
            ['Shares', '2,500'],
            ['Gross profit (2 ticks at 1c)', '$50'],
            ['Brokerage at 0.05% each way', '$50'],
            ['Net profit', 'about $0'],
            ['Cost share', 'about 100%'],
        ]
    }
} />

Same skill, same number of ticks, completely different business.

## A quick cost calculator

```python
def round_trip(price, tick, ticks_won, value, bps_each_way=5, spread_ticks=0.0):
    """Net profit and cost share for a scalp. bps_each_way: 5 = 0.05%."""
    shares = value / price
    gross = shares * tick * (ticks_won - spread_ticks)
    cost = 2 * value * bps_each_way / 10_000
    net = gross - cost
    share = cost / gross if gross > 0 else float("inf")
    return round(net, 2), round(share, 3)

print(round_trip(2.00, 0.01, 2, 50_000))   # cheap in ticks
print(round_trip(20.00, 0.01, 2, 50_000))  # expensive in ticks
```

Plug in your own broker's rate and the stocks you actually trade. The answer often explains why a strategy that "should" work doesn't.

## How the traders reduced the drag

What actually helped, in roughly the order of impact:

<Steps>

1. **Fewer, better trades.** By far the biggest lever. Cutting marginal trades removes their costs entirely.
2. **Bigger average win.** Holding winners in the best setups means each trade carries its costs more easily.
3. **Trading the right price bands.** Matching the style to stocks where a tick is large relative to costs.
4. **Cheaper execution.** Active traders talked about the difference between paying around ten basis points or more at some retail brokers and a few basis points with low-cost or direct market access brokers. At high turnover that difference is enormous.
5. **A daily commission budget.** Capping the commission you allow yourself to spend each day is a blunt but effective brake on overtrading.

</Steps>

On the CFD side, remember there are financing costs on positions held overnight, and that the economics differ from share trading. Read the product disclosure documents carefully.

## The "trading for commissions" day

A phrase that came up more than once in the journals, always with a groan: a day spent "trading for comms." Lots of activity, plenty of small wins and losses, a flat gross, and a real loss after costs. If you see that pattern often, it isn't bad luck. It's a sign that you're trading when your edge isn't present.

The next post looks at the antidote: sizing by setup quality, so that your money is concentrated where your edge actually is.

<SeriesNav series="asx-order-book" />

<Disclaimer />


9113d89d2bf4029b020a6946a98ed873462caf6f4871c90f5e529bf8101e372f

How brokerage, spread and tick size eat into ASX day trading profits, why commission as a percentage of gross profit matters, and how to cut trading costs.

For a scalper, brokerage is not a rounding error. It can take half of your gross profit. How commissions, spread and tick size interact on the ASX, why high-priced stocks are so expensive to scalp, and the single journal metric that shows whether your edge is real: commission as a share of gross.

Tag: Trading Costs

Tag: Trading Costs

Commission Drag: The Silent Partner in Every Scalp