# Costs & fees

> How commissions, slippage and position sizing are modelled, always against the trade.

Source: https://docs.texttoquant.com/concepts/costs

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Real trading costs money, and a backtest that ignores that is lying to you. The engine charges fees
on every fill and applies slippage against the trade direction, so a simulated fill is never better
than a live order would have got.

## Fees & slippage

- **Exchange style percentage fees** are charged on every fill: entries, exits, and partial fills
  alike.
- **Slippage is configurable** and always applied against the trade direction: entries fill slightly
  worse than the signal price, never better.

### Say the costs in the sentence

You don't need a settings panel to charge costs, state them in the query and the parser routes
them for you:

- **One flat rate:** *"… with a 0.1% trading fee"*, *"… with commission of 0.1%"*, or
  *"… with 10 bps fees"*, all charge the same single rate on every fill (bps convert
  automatically).
- **Maker and taker rates:** *"… with maker fees of 0.05% and taker fees of 0.1%"*: two rates,
  charged per fill by side.
- **Both together:** *"… with 0.1% fees and 0.05% slippage"* sets the neighbouring knob in the same
  breath.
- **Explicitly free:** *"… with no fees"* records a real zero rather than an unstated default.

A **single-sided rate** (*"0.05% taker fees"* with no maker rate given) is treated as one flat
rate, the engine never invents the missing side. And a maker/taker schedule needs **both legs**:
a half-stated or out-of-bounds schedule is refused with a clarification instead of being guessed,
because guessing would silently make the run cheaper than you asked for.

### Which fills pay which rate

With a maker/taker schedule set, bar-close entries and every forced exit (stop, blow-up,
end-of-data) pay the **taker** leg, they cross the book. Resting limit fills pay the **maker**
leg. A run that charges fees through a schedule counts as a costed run everywhere, including the
grade: it will not be flagged as "graded without transaction costs".

## Execution realism

Three optional models make fills more conservative. All are **off unless set**, an untouched run
is unchanged, and every run is stamped with the fill-model version it executed under, so results
stay comparable across upgrades.

- **Bid/ask spread** (`spreadBps`): a half-spread charged on taker fills and **waived on maker
  fills**, crossing the book costs the spread; resting in it doesn't.
- **Volume-capped fills** (`maxBarVolumePct`): a fill may not exceed the set share of the bar's
  volume. Trades that get sized down say so (`volume_cap` vs `affordability`), so a smaller
  position is always attributable.
- **Market impact** (`marketImpactK`): charges more the larger a share of the bar's volume your
  order takes. **Impact requires the volume cap**, without a fill cap the share is unbounded and
  so is the number, so the engine refuses impact-without-cap with a named warning rather than
  producing one.

<Callout variant="info" title="Funding isn't a modelled cost">
  On perpetual futures, funding is available as a *queryable signal* (`funding rate`, `aggregated
  funding rate`) you can trade on, but it is **not** charged against P&L as a holding cost. If a
  strategy holds perps for long stretches, budget for funding yourself.
</Callout>

## Position sizing & liquidation

How much you commit per trade shapes the equity curve more than almost anything else.

- **Sizing modes:** risk based (risk a fixed % of equity per trade against your stop distance),
  % of equity, and fixed sizing, all with an **affordability cap**, so a position can never be
  larger than the account can actually pay for.
- **Leveraged futures include a liquidation model**, and spot shorts carry a margin style
  liquidation backstop.
- **Equity can never go below zero.** A blow up terminates the run rather than letting the simulation
  trade with money that no longer exists.

<Callout variant="info" title="Set costs to match your venue">
  Fees and slippage are inputs, not fixed constants. Model the fee tier and typical slippage of the
  exchange you'd actually trade on. A strategy that only works at zero cost isn't a strategy.
</Callout>

See how sizing is expressed in a query under [entry & exit logic](/docs/reference/entry-exit),
and how it's scored in the [Metrics reference](/docs/reference/metrics).