You think you only pay 1 euro per trade? Reality is more complicated. Hidden costs can eat up 3-5% of your annual returns — without you even noticing.

1. The Spread — The Invisible Fee

The spread is the difference between bid and ask price. For liquid DAX stocks it is typically 0.01-0.05%, for small caps or crypto it can be 0.5-2%. This means: every trade starts in the red.

Example: With 100 trades per year at an average spread of 0.1%, you lose 10% of your trading volume through spreads alone. On 50,000 euros trading volume, that is 5,000 euros.

2. Slippage — The Price Moves Against You

Slippage occurs when the actual execution price deviates from the displayed price. Especially in volatile phases, the difference can be substantial. Market orders are more susceptible than limit orders — but limit orders may not execute.

3. Financing Costs for Leveraged Products

CFDs and leveraged positions incur overnight financing fees. With 5:1 leverage on a 10,000-euro position, you pay approximately 5-8% annual interest on the leveraged amount. Over months, this adds up enormously.

4. Currency Conversion Fees

Trading US stocks through a euro broker incurs a currency conversion on every buy and sell — typically 0.25-0.5% per transaction. With Interactive Brokers, you can maintain a multi-currency account and hold USD directly, eliminating these costs.

5. Inactivity Fees and Custody Costs

Some brokers charge monthly custody fees or inactivity fees if you do not trade regularly. Trade Republic and Scalable Capital have no custody fees. Interactive Brokers eliminated the inactivity fee in 2021 — still check the fine print of your broker.

How to Minimize Costs

Use limit orders: Avoids slippage and controls entry price
Trade liquid instruments: Tighter spreads on large caps and major forex pairs
Avoid overnight positions: On leveraged products — or consciously account for them in your trading plan
Multi-currency account: Saves currency conversion costs on international trades
Volume discounts: Above certain trading volumes, costs per trade drop significantly

Bottom Line: The cheapest individual transaction matters less than the total cost structure. Calculate your annual trading costs realistically — and choose the broker that fits your trading volume.