In net profit calculation, what role do fees play?

In net profit calculation, what role do fees play?

• A. Fees increase net profit
• B. Fees do not affect net profit
• C. Fees reduce net profit
• D. Fees only apply to losers

Answer: (C)

Fees are costs that reduce the amount you keep as net profit. When you calculate net profit, you subtract all expenses from revenue, and fees from brokers, exchanges, or processors are part of those expenses. They shrink the bottom line, not add to it. For example, a trade that nets $1,000 in gross profit becomes $975 net profit if $25 in fees are paid. This effect occurs regardless of whether the trade wins or loses, so fees consistently reduce net profit.

Fees are costs that reduce the amount you keep as net profit. When you calculate net profit, you subtract all expenses from revenue, and fees from brokers, exchanges, or processors are part of those expenses. They shrink the bottom line, not add to it. For example, a trade that nets $1,000 in gross profit becomes $975 net profit if $25 in fees are paid. This effect occurs regardless of whether the trade wins or loses, so fees consistently reduce net profit.