Trading costs refer to the expenses incurred when buying or selling financial assets, such as stocks or bonds. These costs can include brokerage fees, which are charged by firms like E*TRADE or Charles Schwab for executing trades, as well as spreads, which represent the difference between the buying and selling prices of an asset. In addition to brokerage fees and spreads, trading costs may also encompass market impact costs, which arise when large trades affect the asset's price. Understanding these costs is essential for investors, as they can significantly impact overall returns on investments over time.