Trading costs are invisible until you add them up, and in a high-turnover trend system they can quietly erase the edge. Commissions, spreads, and slippage compound with every trade. Enter your numbers to see the annual cost in dollars and as a percentage of your portfolio.
Why turnover is the hidden tax
A system that trades monthly makes roughly two dozen round trips a year. If each round trip costs a fraction of a percent, the annual drag can reach several percent. That is why the signal you choose matters: a faster signal trades more and costs more. Prefer liquid ETFs with tight spreads, and keep turnover as low as your rules allow.
FAQ
What is spread and slippage?
The spread is the difference between the bid and ask price. Slippage is the difference between the price you expected and the price you actually got. Both are costs you pay on every trade, on top of commissions.
How much do ETF trading costs matter?
Enough to change a system’s outcome. A 3% annual cost drag compounds over years and can turn a marginal strategy negative. Low-cost, low-turnover systems have a real advantage.
How can I lower trading costs?
Use liquid ETFs with tight spreads, trade less often, and choose a broker with low or zero commissions. Avoid trading in the first minutes of the open, when spreads are often wider.
Disclaimer: Educational tool only, not financial advice. It performs arithmetic on your inputs; it does not recommend any trade, position, or strategy. Full disclaimer and affiliate disclosure.
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