Discount Online Trading - Articles

Discount online stock trading has become very popular in the world of online trading. The commissions of brokers who offer discount online stock trading are quite low compared to other brokers. This allows those who are not starting off with a great amount of capital to still be able to invest in the stock market. For example, by making a minimum initial deposit of $2000 dollars, an investor will be able to make trades for less than $10 with no monthly fees. This makes discount online stock trading very attractive to beginning investors or those looking to invest moderately in the stock market.

Because discount online stock trading is so attractive to many beginners, it sometimes has a tendency to attract scammers who offer discount prices and high returns then slam an investor with fees. When this happens, many investors end up finding discount online stock trading has become not-so- discount after all. The basic rule that says ‘if it sounds too good to be true, then it probably is’ rings loudly in these scenarios.

The list of fees to look at when considering a discount online stock trading broker are as following:

• Set-up fees- the charge for setting up or maintaining you account. Although this is a less common trait, scammers are known to have high set-up fees.

• Annual fees- even legitimate brokers charge an annual fee but when this fee is added up with other fees, most investors discover how certain discount online stock trading sites are able to give their ‘discounted’ commissions!

• Third party costs- service providers not affiliated with the broker will sometimes execute online orders and then deduct their own fee from the balance before passing it on. Sometimes the investor is made aware of this- most of the time they are not!

• Interes ton balances- some investors choose to leave excess cash in their accounts for when they decide to trade at a later time. Some of the unscrupulous discount online stock trading sites will leave the money sitting there instead of offering interest or money market accounts so that the investor’s money is working for them during its downtime.
  

It is always a good idea to read the small print to assess what types of penalties or fees are applied to investors by the discount online stock trading broker and under what conditions. This is where the old adage ‘better safe than sorry’ also comes into play.

As with all stock market ventures, it is important for investors to do their homework, not only to become well-versed in the lingo and aspects of its technical analysis, but to find discount online stock trading sites that are legitimate and reliable. Luckily, the SEC has been quite forward in taking action against discount online stock trading sites with less then favorable practices. As encouraging as the results have been, this does not mean that there is not the occasional scammer lurking who still hopes to ensnare the unsuspecting investor who doesn’t read fine print.