Cheap Stock Trading
Nov 19th, 2009
When you are looking for a way to trade stocks cheaply you really need to do your research. There are many different factors to consider. There are more pricing models than you can imagine. You have to know what kind of trades you are going to be making. Are you going to be trading huge volumes of shares of penny stocks? Are you just stock trading with your risk capital, and will only be making a few trades a month? For the active stock trader the commissions from the online broker can really add up. If you were to make just 5 trades a day with a $10 commission you would be spending over $13,000 over the course of a year. Finding cheap stock trading is a very important part of your overall stock trading strategy.
Finding the best discount stock broker is not a one size fits all shoe. You need to answer some of the questions above to have an idea of how much trading you will be doing.
Cost per trade
Some brokers charge by the trade. What that means is you can buy up to some set maximum shares for one flat rate. This is a very cheap method for trading stocks if you are going to be trading high volumes of shares.
Cost per share
You can get a pricing model that charges you a set price for each share you purchase. This this pricing model is the cheapest for those of you who trade a lower number of shares per trade.
Option contract price
If you are going to be trading stock options you will need to know the fee structure for purchasing stock options. Some brokerages charge a fee for the trade on top of the price per option contract. If you are only trading a couple of contracts at a time it might be better to go for a broker that only charges the price per option contract without the trade fee.
Other fees
There are often unadvertised fees that are associated with stock trading accounts. There are stock brokers that charge a monthly maintenance fee, and some require an account minimum. Some brokerages charge money for use of their advanced software or data. Sometimes you can get a better per trade price or even a certain number of monthly free trades if you carry a certain account balance. My best advice is to read the fine print before you decide to put your money in an online brokerage account.
Software
Don’t underestimate the value of good trading software. If two brokers are fairly close to each other on price the software you will be using to make your trades could be the deciding factor. You have to be comfortable with the mechanics of making your trades.
Compare the discount brokers using the above criteria and you will be better off than most people who just go with the first online stock broker they find. It’s never a bad idea to open a free practice stock trading account to test out the software before you decide where to do your trading. You might miss out on a broker you would like more if you are only looking for the cheapest stock trading sites. Balance the cost and the overall experience to make your stock trading experience one that suits your needs.
Related Posts
- Cheapest Online Stock Trading
- What are the Best Online Trading Sites?
- How to Buy Shares
- Opening a Practice Stock Trading Account
- Stock Buying