How can I prevent commissions and fees from eating up my trading profits?

Investing, Stocks
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January 2017
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If you are an active trader, then you need a good discount brokerage firm.  And there are two kinds of execution costs, explicit and implicit. Explicit are the obvious hard costs, the actual trade cost, or commission as you called it. But implicit costs are from bad execution. So if I went to the very cheapest brokerage firm for trades, but their execution was lost, did I save money? As an example, if trades at one brokerage firm were $6 versus $2 at the cheaper firm, but the execution price was $15 dollars higher, then in reality I lost $11. Sometimes you get what you pay for.

Iin fairness, execution prices have become much more competitive, as have brokerage fees. So your trading proficiency is much more important than transaction fees. Make sure you have a solid strategy and start small or even paper trade until you become confident the time and effort is worth it.

Best of luck, Dan Stewart CFA®

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