One of the larger fees associated with stock trading are the brokerage fees. This has led to a rise in the number of cheap online trading platforms being offered to investors as a way to keep their costs low.
While cheap online trading platforms may seem like a great way to save money on transaction fees, there are some things you may need to consider.
Support and Customer Service:
Cheap online trading accounts can allow you to execute a large number of trades with relatively low fees and charges. However in order to keep your costs down, the brokerage may also elect to keep their own overheads down as well. This can often mean a reduced amount of support or customer service levels. Get more: http://globalfinancialmarketwatch.com/forex-trading-techniques/
If you’re comfortable trading on your own without the need for customer service or technical support then a cheap online trading account could be ideal for you.
Commissions and Fees:
Every different broker charges a range of fees and charges associated with your trades. While cheap online trading offers you a lower set of fees, you may not be receiving the same benefits as you would with a slightly higher priced broker.
The primary difference between cheap online trading and more expensive brokers – aside from the price – is often the level of service and support you receive.
If you’re truly mindful of reducing your brokerage fees, then there is an even cheaper way to add stocks to your portfolio than just aiming at a cheap online trading account. You could simply opt for the dividend reinvestment plan. This option allows you to convert your dividend payments into extra shares added to your portfolio automatically with no brokerage fees at all.
Sometimes cheap online trading accounts may have very low fees for each transaction or trade you execute, but there are brokerages that have plenty of hidden fees that you need to be careful of.
When you’re searching for cheap online trading accounts, see if you can access information regarding some of the other fees that may potentially be charged. These can include:
- Account keeping or maintenance fees
- Inactivity fees for not accessing your account for specified periods of time
- Asset transfer fees in the event of transferring stocks into your account for security purposes
- Minimum balance penalty fees for reducing your account below an agreed minimum balance
- Interest charges on margin loans for investors who prefer to trade using leverage
Cheap online trading accounts are able to offer you the same transactional service as more expensive brokerage services, but it’s always wise to check any other associated costs that may be incurred before you open your own account. When you’re happy with the cheap online trading account you’ve located and you’re sure that the fees being charged are standard across most brokerages, then activate your account and enjoy your trading.