Many people watch only the stock price and ignore that every trade quietly deducts money: commission, stamp duty, and transfer fees. Buy and sell once and the combined cost can eat a noticeable slice of your profit. For short-term, high-frequency traders, the drag is enormous. Let's explain the full cost structure of A-share trading so you know exactly what every trade really costs.
The Three Cost Components: Commission, Stamp Duty, Transfer Fee
A-share trading costs are made up of three parts: commission, stamp duty, and transfer fee. Commission goes to your broker, charged on both buy and sell, typically around 0.025% to 0.03% (negotiable), with a 5-yuan minimum. Stamp duty goes to the state and is currently charged only on sells, at 0.05% (5 per 10,000). Transfer fee goes to the clearing house, charged on both sides, at 0.01% (1 per 10,000).
Special note: commission has a 5-yuan minimum. At 0.025%, a 20,000 trade produces exactly 5 yuan — just at the threshold. But a 10,000 trade would mathematically cost 2.5 yuan, yet you still pay the 5-yuan minimum — so small, frequent trades push your effective rate up to 0.05% or higher.
| Fee | Charged by | Direction | Rate | Minimum |
|---|---|---|---|---|
| Commission | Broker | Buy & sell | ~0.025%-0.03% | 5 yuan |
| Stamp duty | State | Sell only | 0.05% | None |
| Transfer fee | Clearing house | Buy & sell | 0.01% | None |
Worked Examples: Round-Trip Cost at Different Sizes
Assume a 0.025% commission and one buy plus one sell (one full round trip). For a 100,000 buy: buy commission = 100,000 × 0.025% = 25, transfer fee = 10. On the sell: commission 25, transfer fee 10, stamp duty = 100,000 × 0.05% = 50. Total round-trip cost = 25+10+25+10+50 = 120 yuan, or 0.12% of the amount.
Now a small trade: a 10,000 buy at 0.025% would be 2.5 yuan, but the 5-yuan minimum kicks in, so commission is 5 and the transfer fee 1; on the sell, commission 5, transfer fee 1, stamp duty 5. Total = 5+1+5+1+5 = 17 yuan, or 0.17% — a notably higher cost ratio than large trades. That's why frequent small trades are the least efficient.
To compute your own trading costs precisely, enter the amount and rate into the percentage calculator; to see how much fees eat into a year of frequent trading, the compound interest calculator makes the compounding erosion vivid.
| Trade size | Buy cost | Sell cost | Total | Cost ratio |
|---|---|---|---|---|
| 10,000 | 6 (commission 5 + transfer 1) | 11 (commission 5 + transfer 1 + stamp 5) | 17 | 0.17% |
| 50,000 | 17.5 | 32.5 | 50 | 0.10% |
| 100,000 | 35 | 85 | 120 | 0.12% |
| 500,000 | 175 | 425 | 600 | 0.12% |
Four Practical Ways to Cut Trading Costs
First, negotiate your commission. 0.025% isn't the floor — many brokers will go to 0.015% or even 0.01%, and the more capital you have, the more leverage you have. Over a year that saves real money. Second, cut pointless trades. Fees plus stamp duty mean every round trip loses at least 0.1%; over a year of frequent trading, costs can swallow most of your gains — use the CAGR calculator to see your true annualized return after costs. Third, favor medium-to-large trades to avoid the rate inflation of the 5-yuan minimum zone. Fourth, don't add positions just to "average down" the fee — that only multiplies both fees and risk.
One final reminder: each trading cost looks small, but under long-term compounding, every fraction of a percent erodes your returns. High-frequency, small-capital churning is the least profitable game; trade less and negotiate your rate down, and you'll already be ahead of most retail investors who never track their costs.
FAQ
Q1: Is stamp duty charged on buys or sells?
Currently A-share stamp duty is charged only on sells, at 0.05% (5 per 10,000); buys pay none. It's an important tool the state uses to tune market activity, and the rate has been adjusted many times historically.
Q2: What does the 5-yuan minimum commission mean?
It means if the rate-based commission comes to less than 5 yuan, you still pay 5. Small trades (a few thousand yuan) see their effective commission rate rise sharply, and frequent small trades carry a noticeably higher cost ratio — avoid that zone.
Q3: What's the transfer fee, and does every account pay it?
The transfer fee is charged by the clearing house when a stock moves from seller to buyer, on both sides, at 0.01%. Both the Shanghai and Shenzhen exchanges charge it; historically Shanghai charged it separately while Shenzhen didn't, but it's now unified.
Q4: How do I check my real commission rate?
Read your trade confirmation statement — that's the most accurate. In your broker app, open a filled trade's "confirmation," divide the commission by the trade amount, and you'll get your actual rate. Then decide whether to renegotiate with your broker.