Transaction cost refers to the expenses incurred in the process of buying or selling a financial asset. It includes any fees, commissions, or other charges associated with executing a trade. Transaction costs can vary depending on the financial instrument, the size of the trade, the liquidity of the market, and the type of brokerage firm used to execute the trade. Examples of transaction costs include broker commissions, exchange fees, and bid-ask spreads. Minimizing transaction costs is a key consideration for traders and investors, as high costs can significantly impact investment returns.