Finding and Using Low Cost Stock Trading
There are only two aspects to low cost stock trading that you need to really focus on:
One is to find the broker with the lowest commission and margin rates, without sacrificing the necessary features and services. Two is to know how to trade. Even if you have the least expensive commission broker in the industry, trading can still cost $1000s a month in LOSSES if you trade poorly.
Choosing a Broker
Discount Broker:
Primarily an online broker. A Discount Broker is basically a no-frills online brokerage firm that keeps their commission costs low by providing only the basics and does not provide any investment advice. Most stock traders use a form of discount broker due to the quantity of trades they make. This is the type of broker you must use for low cost stock trading.
Full Service Broker
A Full Service Broker- has many licensed Stock Brokers to offer investment advice, personal financial planning, retirement advice and a basic online trading platform. A full-service brokerage charges much higher commissions but will provide you with recommendations, investment advice and a lot of technical support. They cater towards higher net worth individuals not traders.
There are many full service brokers with stock trading platforms on the internet. Check out some of those brokers and compare fees and commissions charged. Some actually have reasonable fees and it is definitely worth the extra money for someone new to trading. For experienced traders or those only concerned with low cost stock trading then a full service broker is out of the question.
Low Cost Stock Trading Depends on Low Commissions
<2000 trades per year from a Discount Broker at a commission of say $5.00 per trade comes to $10,000 per year in commissions. The same 2000 trades per year at another broker that charges you $20.00 commission per trade= $40,000 per year.
Primary Cost Considerations for Low Cost Trading
- commissions for stock
- margin interest rates
- mutual-fund transaction fees
- commissions for options trades
Hidden Fees: The Killer of Low Cost Stock Trading.
- Insane Charges for Broker Assisted Trades or Automated Phone placed Trades
- Inactivity fees
- Trading Platform Charges – Level II fees, Real Time Quotes and Charting etc.
- Account maintenance fees
- Monthly software usage fees
- Sales charges on certain securities (e.g. loads on mutual funds)
- Fees for transferring assets both into and out of an account
- Fees for not maintaining a minimum balance
- Excessive Margin Rates
Best Brokers for Low Cost Stock Trading
Optionshouse - $2.95 per stock trade. The lowest price online available today. Excellent customer serrvice and Live Chat via their site. They dont have an online trading trading community.They offer live chat through their site and are very helpful and easy to reach over the phone. They offer investment coaching, and amazing professional trading platform, option trading alerts.
Zecco – $4.50 online trades – plus up to ten free trades every month if you maintain a minimum of $25,000 with the brokerage or a minimum of 25 trades. Zecco is a great choice for low cost trading.If you do not have the $25,000 minimum account balance trades are $4.50 per per transaction. The site is not the most user friendly. They also don’t have a lot of the extra services that are useful for tax purposes.
TradeKing – $4.95 online trades- One of the best online sites for low cost stock trading. SmartMoney, Barron’s and Kiplinger all given them exceptional marks. The best prices for online trades.
Thinkorswim was voted the #1 Online Broker in 2009 and 2010 by Barron’s. Think or Swim- per stock commission of $0.15 of flat fee up of $9.95 up to 5000 shares. They offer two flexible commission plans, 24 hour customer support, and a ton of education tools. Traders love them not just for commissions but for their amazing trading platform. thinkorswim let potsential customers try their trading platform for free. They were acquired by broker TD AMERITRADE in early 2009. They were also rated “best for frequent traders,” and “best for options traders” in both 2009 and 2010 by Barron’s .
TradeMonster – $7.50 per online trade. For options they are cheaper than other brokers, especially with large quantities of contracts. Barron’s awarded them a four star rating even thought they somewhat new.
Broker Features
Customer service is an extremely important consideration before signing up with a low cost stock trading broker. New traders often need help placing trades and must choose a broker with a excellent customer service .
Traders should research and find a discount stock trading broker who will offer all the services they require at an affordable rate.
Find out if the broker has a demo trading account. Take advantage if they do as you will be spending hours every day with their platform. Make sure it is intuitive, easy to use and very customizable.
How To Evaluate An Low Cost Stock Trading Brokerage
Investor Portfolio Features:
- margin status updated in real time
- positions updated in real time
- current balances updated in real time
- transaction history
- links to news and research from your portfolio
- tax reporting for your account
- simple application process
- easy access to research and account status
- availability of a trading ticket throughout site
- adaptable and tailorable to the traders tastes
- easy switching from screen to screen
- well-designed and intuitive trading platform
- easy to use and intuitive website
Customer Support/Service:
The level of customer service across the different online brokers can vary greatly. Refer to online reviews of customer service for the different brokerage houses.
Get the customer service number for the brokerage house and test them. See how quickly each one answers the telephone, see the average time spent on hold when a customer calls in.
- ability to visit a broker in person
- frequently-asked-question section
- user guides’ for website and trading platform
- glossaries, forums, newsletters, blogs
- seminars, webinars
- access the account via a mobile device
- do you want to speak only with your broker
- email options
- live-chat capability
- live online classes
- definitions
- tutorials
- educational section
- customer service department/ tech support 24 hours a day
cheaper Stock Trading here
Money saved on commissions is more money in your pocket. But remember the key to low cost stock trading is to not lose money by trading without having a plan and the discipline necessary to follow it. I truly hope your pockets become fatter because of this information.
© 2010
Low Cost Stock Trading
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