Is Free Trading Ever A Good Idea?

145

The digital world has made it a lot easier for people from all walks of life to begin building their long-term wealth. You don’t have to have your own financial manager and a huge bank account to buy stocks and shares these days. Some people can even browse the market from the comfort of their own home, using an app on their smartphone.

free-trading

So, if you’re thinking of opening a paper trading account and practicing your skills, should you go for a brokerage solution that has a fee? Or should you be trading on the market for free – with absolutely no commissions to worry about? The rise of apps and online tools means that there are various forms of commission free trading out there – but are they a good idea?

Keeping Costs Low for Beginners

A little research on Google is enough to demonstrate a variety of exchanges and brokerages that don’t require a fee for you to start buying and trading assets. Just remember that you will need some amount of money in your account so you can buy into your chosen positions. Some of these free environments are extremely valuable for beginners who want to keep costs low as they begin to explore their options.

Most of the time, if you work with a free brokerage account, the company will make its money in ways that go beyond commissions. For instance, some organizations make money on margin lending, interest, fees for upgraded support and customer service, and so on. There is a potential problem here, though – rehypothecation. This is a process where a free brokerage uses the assets available on their account as collateral for their own interests and obligations. They can fund their own bets on the market while using your stocks as collateral. If something goes wrong, this could mean that it’s very difficult to access the funds you’re building.

Is Premium Always Best?

A free trading environment represents a good opportunity for learning and growth if you’re a beginner in the marketplace. As long as you take your time to explore and research your options carefully, you should be able to keep your risk levels to a minimum. However, if you’re planning on using your funds to make some serious cash in the long-term, you’ll get much better results with a premium account.

Paying for your service might be a headache that cuts down on your profits, but it can also give you access to more features, like faster order execution, better order flow performance and more. Paying a little extra for your membership could mean that you get someone who’s specifically dedicated to helping you grow your account. This ensures that you’re less likely to suffer from small delays in executing any orders that you send to the markets. Remember, even the slightest delay in a market decision can cost hundreds or thousands of dollars, because the stock landscape can change so rapidly. Don’t be afraid to look at commission-free trading, but remember not to cut corners if you decide to turn up your trading volume.

Like this post? Let us know!
  • CoolAF (0%)
  • Cool (0%)
  • Whatever (0%)
  • Boring (0%)
  • WTF (0%)
Summary
Title
Is Free Trading Ever A Good Idea?
Description
A free trading environment represents a good opportunity for learning and growth if you’re a beginner in the marketplace. As long as you take your time to explore and research your options carefully, you should be able to keep your risk levels to a minimum.
No tags for this post.

More News from Nexter