| It is important to take the time to do a good | | | | quickly without having to worry about paying too |
| comparison when you are selecting your online stock | | | | much in commissions. |
| broker. You should look at the category of discount | | | | You may think that all online brokers are about the |
| brokers, which includes the cheap stock brokers who | | | | same when it comes to their commissions, but that is |
| specialize in offering an online trading platform for | | | | definitely not the case. First, stock brokers have |
| individual traders. The big names in this category are | | | | quite a variety of cost structures and you have to |
| also known for providing a quality service to their | | | | understand how each one will impact you for the |
| clients. | | | | kind of trading you are planning. Second, there is a |
| Beginning traders are often interested in finding an | | | | definite cumulative effect that makes small |
| online broker with low trading costs. They want to | | | | differences in commissions per trade really add up. |
| pay low commissions and may not want to make a | | | | For example, compare two cheap stock brokers. |
| large initial deposit into their account. This is a good | | | | Broker A has a flat rate commission of $9.95 per |
| strategy for starting out for many reasons. | | | | trade. Broker B has a flat rate commission of $4.50. |
| Whether you are a beginning or a more experienced | | | | That is only a difference of $5.45 per trade, right? |
| trader, keeping your costs down is very important. | | | | But remember when you buy a stock, you pay one |
| Every dollar that you pay your stock broker in | | | | commission and when you go to sell that stock you |
| commissions and fees is one less dollar that you take | | | | will pay a second commission. So now the difference |
| home in profit. Unless you have proven to yourself | | | | is $10.90 per stock. Let's say that you actively trade |
| that you can consistently turn out profitable trades, | | | | over the course of a month and you buy and sell 15 |
| you may be cautious and want to start with a cheap | | | | stocks. You will pay $163.50 less in commissions for |
| online broker. | | | | the cheap stock broker during the month. Over 3 |
| Using a cheap stock broker will give you the most | | | | months, that is $490.50 difference in commissions |
| flexibility in your trading. You can place smaller trades | | | | alone. That is nearly $500 in your profit over the |
| of just a few hundred dollars and your commission | | | | course of one quarter that you are paying to your |
| will cost you much less on a percentage basis. You | | | | stock broker. So a little definitely adds up. |
| can also trade more often, or cycle your trades | | | | |