Should you Pay a brokerage For Dime Stock Advice Or Babies With an Online Trading Platform?
Doing all your own research and handling your own investments is getting increasingly common these days. For most people, the idea of using a broker is quickly becoming a thing of the past. If you don't need professional advice to select your investments then working by way of a broker really doesn't offer any benefit.
Trading online can have your trades put through just as fast (if not faster) and cost far less in commissions for each individual trade. For penny stocks, it's a slightly different situation and dime stock advice is available online for more affordable rates.
If you're working with only a small amount of business growth capital this is even more crucial. The commissions you're paying must not be more than 1% of the cash value you're trading at a given time, and hopefully not so.
Remember, you have to pay commissions twice: When you buy and then again when you sell. If you are paying a brokerage $30 commissions per trade and trading only $1, 500 worth of stock at a time then if that stock increases 8% you basically paid your broker HALF your profits. And the broker didn't even shoulder any of the risk. The broker gets paid even when you sell for a loss. If the stock only went up 4% and you sold it, you just break even and the broker made $60.
With online trading the highest commissions you'll tend to see are still under $10. Some places even give you a promotional number of free trades if you keep a certain account balance and start a certain number of trades every month. In general you'll be paying far less per trade and that means more of the profit goes into your pocket.
With $10 commissions on a $1, 500 sale that means $20 in fees between the purchase and sale of the stock zerodha kite. That means even if the stock peaks at a price 1. 5% higher than what you purchased it at, you can still sell it and not lose some cash. In fact in that example while you still make less than the broker, you actually do make a small profit.
If the stock increases 8% you keep over 80% of the profits for yourself. Keep in mind commissions are not only twice on a trade, but PER TRADE. I know that seems like it's obvious but a lot of people don't think about the fact that if they have $2, 000 to invest, they're probably going to want to split it up into at least two investments just to diversify a bit and protect themselves.
If you put all your money in a stock and it happens to go on the rocks, that's not bad luck. It's bad investment strategy. But if you split $2, 000 up into two $1, 000 bits suddenly the commission fees are going to be double the percentage on each investment than you may have initially thought (because you used to be thinking of the whole, not how much each trade would be). That's why it's important to think ahead of time how many investments you want to split your capital into and work from there.
If you're trading online you can get good dime stock advice from pay newsletters or dime stock websites. Not they all are created equal, but the free ones are guaranteed to be feeding you bad info for their own diabolical investment schemes. Find one with a monthly rate you can afford (if you don't try to deliver your own research) and that has a long history of success.