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Cheapest Stock Trading

Mike — Fri, 04 Feb 2011 01:01:45 +0000

The cheapest stock trading obviously refers to trading costs and commissions and anyone that actively trades should make every attempt to keep their trading fees as low as possible. That is, you should always to use cheap stock trading strategies in your trading business.

The reason for this is because stock commissions are really the expenses in doing business as a trader just like inventory, insurance and utilities are part of the expenses of a traditional business and like any astute business owner it is always prudent to look for ways to reduce costs to boost profits thus the quest to learn cheap stock trading methods.

With the rapid growth in online stock trading there are many online stock brokers that offer deep discount commission and it can be a daunting task to try and pick a reputable broker that will execute your trades in a timely manner while charging you a low commission rate.

One of the main considerations in truly finding the cheapest stock trading is to examine your trading habits.

You need to determine how often you trade to benefit from cheap stock trading and how many shares you trade because most online brokers use these two criteria in constructing their fee schedules.

For instance, if you trade 500-1000 or more share lots that run in the thousands of dollars you might opt for a fixed fee broker that charges a flat fee of $9.95 or less. With this type of commission the trader that trades large positions can really reduce their trading costs as the more shares they trade they lower their per share cost.

Others that trade smaller position sizes will find that a per share commission structure will give them the cheapest stock trading costs because they might only pay .01 a share or less so if they trade 200 or 300 shares they will only pay $2.00-$3.00 as opposes to the larger fixed rate amount.

The frequency of your trading can also play a factor as some online brokerages scale their commissions based on the number of trades you make in a month or a rolling calendar year.

So to find the cheapest stock trading costs it all boils down to the individual trader as it is clear that it is not a one size fits all type of issue.

I mentioned earlier that a broker’s reputation is an additional component in the mix because there is no worse feeling than to be in a position you are trying to close and not being able to access the online broker’s web site or trading platform software.

In this case cheaper is not necessarily better because one trade can cause a loss that quickly erodes most or all of the savings you have accumulated. Keep in mind that brokers do have telephone trading as a last resort but they often charge high fees for this and those fees will also reduce your overall savings and I would definitely not classify this as cheap stock trading.

So, to find the cheapest stock trading for you spend some time analyzing your trading habits and then do some research to find the brokerage that will best suit your trading style.

Cheapest Stock Trading is a post from: Trading Tools Report

Cheap Stock Trading

Mike — Tue, 21 Dec 2010 00:13:22 +0000

If you are as old as I am you probably remember when the term cheap stock trading was an oxymoron. Prior to the advent of discount brokerages unless you held a seat on a stock exchange like the New York Stock Exchange you had to buy your stocks through what today would be called a full service broker.

The brokers held a virtual monopoly on the buying and selling of stocks by individuals and if you wanted to buy stocks you had to purchase through them. This made many brokers very wealthy over the years as the public had no other options to buy stock.

Yes, they did offer a full range of services like free stock reports and free stock picks recommended by their in-house analysts but like anything else in life these services were anything but free.

You always paid the piper when you bought or sold any stocks and these fees were often quite steep with little difference in commissions between brokers. It really was sort of a oligopoly kind of like OPEC is today with oil prices.

In those days cheap stock trading meant buying in volume and in 100 share lots because if you wanted to buy less than 100 shares you got hit with an odd lot fee on top of the commissions. Higher priced stocks also meant higher commissions and it was quite easy to pay one dollar a share or more in commission costs.

Think of the impact that made on anyone that wanted to trade for a living. All of those commissions day in and day out added up to a pretty sizable trading expense which ultimately impacted the trader’s bottom line.

Forget about day trading in those days as the transaction costs would eat up any profits you would generate unless you were a true day trading superstar. Sadly, the days of cheap stock trading online were still years away.

Since a stock broker was paid on a commission basis the more trades they processed the more money they would make so it was in their best interest to encourage active trading as they made money on each buy and sell even if you didn’t.

Sometimes a broker would give you a discount commission to keep you happy but it still wasn’t what I would call cheap stock trading by any means. Even a $50 commission on a 100 share lot is quite expensive to an active trader.

The game all changed in the 1980s as a new breed of stock brokerages sprang up. These were called discount brokers and they offered less in the way of services but much cheaper commission structures. Discount stock trading and relatively cheap stock trades were finally becoming a reality for many investors.

Of course they became extremely popular as droves of stock traders flocked to them to save money on commissions. The days of cheap stock trading were here many thought but little did they know that in this instance good actually became great.

With the explosion of the Internet in the 1990s many of the discount brokers set up sites that allowed you to trade for very low fees like $15, $12 or even $9.95 a trade. At the time that was the cheapest stock trading an individual could hope for.

But it gets even better, as trading platform technology progressed the deep discount broker came into the market and finally the idea of getting the cheapest online stock trading was realized. One online trading platform I use charges less than .01 a share with a minimum of $1.00 per trade. I don’t see how you could make stock trading any cheaper than this!

Another platform I use gives you the option of .01 a share or $9.95 per trade. That way if you trade small volume you can opt for the penny a share option but if you are trading size you can go for the flat rate.

So now traders finally have a choice, they can use full service brokers if they wish or the can use a discount broker and pay a flat rate and still receive great service or they can really indulge in cheap stock trading and set up an account with a deep discount brokerage that is geared for active traders.

Cheap Stock Trading is a post from: Trading Tools Report

Insider Buying

Mike — Mon, 24 May 2010 19:33:50 +0000

When you think of the words “insider buying” I bet you immediately think of either the Martha Stewart insider trading scandal or the movie Wall Street.

Yes, insider trading as defined by the rather complex laws surrounding what constitutes insider stock trading is quite illegal but there is a little known legal form of insider trading that is available to anyone.

You see, by law top company officials like CEOs and VPs must file forms with the SEC whenever they buy or sell any of their company’s stock and since the SEC is a government agency this information is available to the public.

Every trade that senior officials make in their company’s stock must be documented and a cottage industry has sprung up selling these aggregated insider trading reports to the public for very reasonable prices.

Now why would anyone want to know if Steve Jobs is selling large blocks of his Apple stock? Well, it could be a number of things such as part of his long range estate planning or perhaps for a charitable donation.

But, it could very well be that this insider selling along with sales by other Apple officers indicates that Apple is looking at some hard times ahead that could cause the price of the stock to drop sharply.

Conversely if there is a lot of insider buying of a stock by senior officers that could mean that bullish news is forthcoming with a rapid rise in the stock’s price to soon follow.

While this type of discretionary trading strategy is not foolproof (none are) many people do make a nice profit trading on insider information using a few rules of thumb.

Insider Buying is a post from: Trading Tools Report

Cheapest Online Stock Trading

Mike — Tue, 13 Oct 2009 19:11:55 +0000

The cheapest online stock trading is of course free stock trading with the best online stock brokers giving you free stock trades based on certain buying and selling criteria.

If you open an online stock brokerage account you might get 20 trades for free with broker A while online stock brokerage B will give you free trades if you trade “size” or maintain a certain minimum balance. Another might give you 20 trades a month but charge you pay a fee for subsequent trades.

If you can think of a commission structure there is more than likely several online brokerage firms at any given time advertising it. There are plenty of online discount brokers that charge a flat rate per trade or .01 or less a share per trade and some brokerages let you pick from a menu of fee structures to better suit your trading style.

If you trade 1,000 shares blocks it might make sense to go for the $7.95 per stock trade but if you are trading 100 or 200 share lots maybe the penny a share commission makes more economic sense to you and only you will be able to make that decision because only you know your trading habits.

So you see the cheap online stock trading will be different for every trader based on the way they trade stocks. Another thing to consider, even though this isn’t an issue as much now in the competitive world of online trading as it used to be, but in the past the stock brokers offering cheap commissions also had some of the worst customer service.

There is no worse feeling in the world than trying to liquidate a position and have your online stock trading platform go down as your trade position and thus your account continue to drop in value. In one trade you could easily lose more money than what you have saved in trading commissions by choosing the wrong online discount broker!

Thankfully the market votes with their dollars and any stock brokers offering cheap commissions that provide less than stellar customer service often find themselves with a shrinking customer base as word gets around very quickly in the online trading community.

So how do you get the cheap stock trades along with customer service? Simple, search out various online brokers by visiting their sites and make an Excel sheet of their fees. Next, review the stock trades you have made in the past to get an idea of how often you trade and the number of shares and dollar value per trade and pick the best brokerage account that fits your needs. Now do your due diligence and search for everything you can about the brokerage. Read comments made by people in trading forums, etc. and eliminate any companies with bad reviews.

The goal is to get a well-balanced overview of the brokerages before you commit your money and open an account. If the reviews are bad go back to your worksheet and look at the next stock broker and check them out. This should leave you with a list of the best online stock brokers and it should be easy to pick one.

Finally, open an account with the online broker you have chosen and download any stock trading platform and learn how to use it before actually buying and selling stocks with real money. Oftentimes best stock brokers will have a trade simulator that lets you practice simulated trading so you can get used to the different options of the online stock trading platform.

Put in a little effort upfront investigating your options and you will end up with a cheap online broker that will let you trade stocks online cheaply and efficiently.

Cheapest Online Stock Trading is a post from: Trading Tools Report

Buying Stocks Online

Mike — Wed, 26 Aug 2009 18:02:05 +0000

Anyone that wants to learn the stock market needs to have a place where they can buy and sell their stocks. Easy right? Well, maybe not when you consider how many possible ways you can buy stocks online or offline.

In the old days the only choice to buy stocks and bonds was with what is called a full service broker. Remember those EF Hutton ads? There was no buying stocks online because there was no online!

Just to get a stock quote you had to call the broker and they either had a teletype machine that would give quotes that were delayed around 20 minutes or so or they had to call their floor traders and get a quote for you.

These full service brokers charged very high commissions (this was before the discount stock brokers became popular) and usually tried to sway you towards the stocks that the brokerage firm either thought were good issues or what they had in their inventory and had to unload.

You could easily pay $50 to $100 or even more on a 100 share round lot of a stock depending on the stock’s price. Sometimes the broker would knock a few bucks off if you were a regular but you still ended up paying an outrageous amount in commissions.

Good brokers back then earned tons of money and really had a pretty nice thing going for them until the discount stock brokers came into existence.

These discount brokers would charge fixed fees or a few cents a share and you could easily buy stock for $10 a trade. Firms like Scottrade, Charles Schwab and Fidelity are examples of what the modern day discount brokers look like and many of these discount brokers can be a called a true online stock broker with the many benefits of a full service stock broker like company research while giving you an online stock market trading platform where you can buy and sell stocks in real-time.

Active traders usually look for even bigger discounts and some of the best online stock trading deep discount brokers like Interactive Brokers charge 1 penny or less per share depending on your lot size. They have a $1 minimum so if you buy anything less than 100 shares you pay a buck.

How’s that for trading stocks online cheap! I use IB for many trades and it is amazing how cheap the trade commissions are.

One thing you need to be aware of with online stock market trading using a deep discount broker is the learning curve of their trading platform.

Every online stock broker has their own software for trading stocks online and you need to spend some time learning the trading software before you actually make any real online stock trades.

Even when you are comfortable with the online trading software you can make mistakes. Several times I have accidentally bought a stock or bought more shares of a stock online because of keying errors. A few seconds and a few hundred dollars loss soon teaches you to be very careful when entering your online stock orders.

TradeStation is another good tool for online stocks trading as it allows you to write trading systems and do extensive backtesting, etc. and the trading platform is very nice but Tradestation charges about $100 bucks a month depending on your account options unless you have a large account balance or are a very active online stock trader while Interactive Brokers provides a free online stock trading platform.

So today your options for buying stock online are so vast that it really isn’t that easy picking an online stock broker so you can trade stocks online whenever you want.

There are many discount and deep discount online stock brokers to choose from and most of them are pretty good but like anything else related to trading stocks online you need to do some research.

I have the firms I like for buying stocks online but they might not be right for your online stock market trading so the best thing to do is look for reviews of any online stock broker you are thinking about using in your online trading.

Reviews from actual customers are a great way to learn the good and the bad about a particular online broker but be sure the reviews are real and not fakes put up the firm itself. If you are investigating better known online brokers the odds are that the reviews will be real.

A major factor to consider when choosing a broker for buying stocks online is the stability of the online trading platform. If it is constantly down or has data issues that can cost you big money in your online stock trading business. You absolutely need to get this one right or you will be very frustrated when you are trying to make an online stock trade and you can’t log into your account or stand-alone trading application.

Most online stock trading firms do have 800 numbers you can for trading but the commissions on these can be fairly high compared to doing it yourself online.

You also want to be sure that the online stock trading companies you are looking at are solvent and that they have ample protection for your account(s). You don’t want to wake one day to find that your online trading brokerage went out of business and you didn’t have adequate account protection.

Once again, most of the “name” online stock brokerages will have more than enough account insurance to cover most people’s online stock trading accounts.

In summary, buying stocks online is so much easier than using a full service broker and cheaper too! Just make sure you do your due diligence before you open an account and take the time to learn the terms of service and how the online trading system works and you will be fine.

Good luck in your online stock market trading and I hope you are profitable!

Buying Stocks Online is a post from: Trading Tools Report

Nicolas Darvas and the Darvas Box Method

Mike — Mon, 28 Apr 2008 16:54:32 +0000

Several years ago I became fascinated with Darvas Boxes after reading “How I Made $2,000,000 In The Stock Market” by Nicolas Darvas.

This book is considered by many as a trading classic and I read it at least twice myself. It is an easy read but is filled with some great insights into price action and is a “must read” book.

Who was Nicolas Darvas?

Darvas was a world famous ballroom dancer in the 1950s that learned to trade stocks while touring the world performing with his sister.

What makes his story so interesting is that he devised a trading system that looked for stocks making new highs and traded them by telegram using closing stock prices.

Since he made his trading decisions without the normal market noise of news and intraday price fluctuations he could remain totally objective which is something we all need to achieve in our own trading isn’t it?

Darvas Box Method

Put simply, Darvas constructed “boxes” (similar to a channel breakout) around a stock’s price chart looking for price breakouts based on formulas that can be found in his book and based his trades on them.

Since I like looking at new trading methods I immediately started searching for a software tool that would automate the construction of the Darvas Boxes on my charts.

For the most part everything I could find was either biographical in nature or was an explanation of how to manually construct Darvas Boxes.

The only real tool I could find was a Tradestation system written by a private party that was for sale. I bought it and played around with it for a bit but the problem with Tradestation is that it is extremely limited in its ability to scan a universe of stocks so I shelved my research into Darvas Boxes.

As I was writing this article I did a quick search and it looks like today not much has changed. Most of the information on Nicolas Darvas is about him, his books or an explanation of his system rules.

While there are a couple of sites that sell Darvas Box packages I wasn’t very impressed with them. One site’s product offerings were all “out of stock” which makes me wonder if they are even selling software anymore.

Nirvana Systems to the rescue…

Fortunately, the folks at Nirvana Systems built a Darvas Box plug-in for OmniTrader a few years ago that not only implements the original Darvas Box rules but also includes some enhanced Darvas Box systems.

Being an OmniTrader user I bought the plug-in and I must say that it is a very nice implementation of the Darvas Box method, easily the best available on the market today.

Will it make you money?

That’s the $2,000,000 question isn’t it? Just as a power drill can make a hole in a board or a hole in your hand a trading tool can either make you money or lose you money, it’s all in how you use it.

There is no “magic bullet” or “Holy Grail” in trading, just tools we can use to help us trade better if we use them correctly.

So, if you are interested in using Darvas Boxes in your trading I would recommend taking a look at the Nirvana Darvas Box Plug-in for OmniTrader.

Note: Once you get to the site click on the Store link to find out more about the Darvas Box plug-in.

Nicolas Darvas and the Darvas Box Method is a post from: Trading Tools Report

Stock Trading Is Boring If You Are Trading Stocks The Right Way

Mike — Fri, 18 Apr 2008 13:45:06 +0000

What?

Did you think that trading was exciting? I think you are thinking of gambling where the rush and the action is a big part of the “gaming experience”.

Question…

How many people that gamble are net winners over time? Do you know any?

Trading is a business, period. You are in business to make a profit, not get a cheap thrill. Sure it is fun and stimulating but the actual act of trading is and should be boring.

If you are bored trading that means you are following your trading plan to the letter and executing your trades without your emotions getting in the way. You are on autopilot, a trading machine if you will.

Hopefully you have bought or built trading systems that have an edge in your chosen markets and you know over time you will be profitable by sticking to your plan.

You don’t jump from one idea to the next without thorough research and testing. You don’t follow your hunches and override your system rules “just this once”.

No, you follow your system putting on and taking off trades as required. Boring but profitable

If you feel bored trading congratulations, you have mastered your emotions and are trading like a pro.

Stock Trading Is Boring If You Are Trading Stocks The Right Way is a post from: Trading Tools Report

Stock Market Game

Mike — Wed, 16 Apr 2008 13:31:15 +0000

I remember buying a stock market game when I was a kid and playing it with my sister (I think she still has it). While it was fun it was really just a version of Monopoly and didn’t actually teach me anything about trading.

If you really want to learn stock market trading there are two schools of thought as to how you initially approach the markets…

First, there is paper trading where you simulate your trades and record them either using paper, a spreadsheet or computer program.

The second method is to use real money and just start trading once you have developed your trade plan and have all of your trading tools in place.

Now, many people will strongly advise that you paper trade for some time before risking real money while others say that this makes little sense as you never know how you will react until you are tested by fire and have real money at risk.

I fall into the latter group and don’t paper trade because it is too easy to do. By that I mean that your emotions are not a factor when you are using “play” money and until you have real cash on the line you won’t know how you will really do as a trader.

In recent years there is a new method of learning to trade that goes by many names and is a nice bridge between paper trading and actual trading that you might want to consider…

Fantasy stock market game, virtual stock market game and online stock market games are just a few of the terms used to describe these new stock market simulation games that are web based and often free to join.

I have been looking at one of these free stock market games called Wall Street Survivor that not only allows you to sharpen your trading skills without risking your capital but also lets you win prizes while doing so by competing against other traders.

For those of you that don’t want to risk your money while learning to trade I would take a look at Wall Street Survivor. Hey, it’s free and you just might win something.

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Stock Market Game is a post from: Trading Tools Report

Hot Stock Market Tips

Mike — Tue, 01 Apr 2008 18:27:43 +0000

Pssst, want a hot stock market tip? Here is the best stock market tip you will ever get…

Don’t listen to stock market tips!!!

This post is all about stock market tips and why you should avoid them like the plague. In fact, if you hear a good stock market tip plug your ears, whistle Dixie and walk away and you will save yourself a whole lot of emotional stress and money.

Think about it, if someone really had some insider information would they tell you? If they did and you made a trade based on that knowledge you could be guilty of insider trading and could end up in jail just like everyone’s favorite Domestic Diva (To be fair she went to jail for lying to a grand jury and not insider trading proper but you get my point).

Here are some of my favorite sources for hot stock market tips:

The Friend

How about that hot stock tip from a friend or acquaintance? Maybe your dentist or doctor tells you about some hot stock they are “playing” and you get excited. After all, they are professionals so they should know what they are talking about right?

Well, statistically speaking doctors are some of the worst investors/traders out there so keep that in mind when they tell you about some up and coming medical penny stock.

Be especially careful if they say something like, “This stock is going to be the next xyz”. You can be pretty sure the stock will be a dog if they hit you up with that.

The Cold Call

You get a call out of the blue from someone you never heard of talking about a hot stock that is going to _____ (fill in your own ending) and you need to get in right now.

Wow! Some big time broker called me up, I must be important! Well, you are something if you listen to them…

Stupid!!!

Most of these guys are working from a list and peddling worthless penny stocks to unsuspecting people. For some great insight watch the movie Boiler Room to see how it’s done.

The legitimate brokers are usually rookies that get assigned a desk, cold call list and phone and are let loose. The stock tips they offer are typically for issues that the brokerage firm has an inventory of and needs to lighten up on.

Speaking of brokers…

Have you ever seen a brokerage firm give many or even any sell signals on a stock? Nope. Normally they will say something like Hold or Watch or some other euphemistic term to soft peddle their weak opinions.

Magazines

Do you think that the editors of mainstream financial magazines (names withheld to protect myself from lawsuits) really know any more about the market than anyone else? I myself have been burned many times by these highly regarded magazines before I wised up.

Another thing about magazines and stock tips in general, everyone tells you what and when to buy but nobody tells you when to sell. I guess you just keep the stocks forever. Even Warren Buffet doesn’t do that ?

Stock Forums

These are rife with stock touts that talk up a stock or bad mouth it in order to try and manipulate the prices. Most shares have such high volumes that these guys really are little more than an annoyance but they can be very tenacious and love to dish out their opinions on a stock and get into arguments.

The best advice I can give is to stay away from individual stock discussions and instead focus on trading techniques that apply to any market.

I hope by now you have come to realize that any stock market tip is probably worthless. You need to think in terms of prices and not individual stocks if you want to be a systematic trader.

When I trade all I see are symbols and numbers. I could care less what the stock is or what the company does.

Nobody can predict the markets or tell you how a stock is going to do. The best we can hope for is to have a set of rules that have been statistically proven to give us an edge in the market and to follow those rules religiously.

Hot Stock Market Tips is a post from: Trading Tools Report

Trade Management Software

Mike — Tue, 25 Mar 2008 16:06:00 +0000

If you are a system based trader it is imperative that you track you system(s) performance right? Think about it, how do you know how well a given system is performing?

Do you try and track key performance metrics in Excel? Good luck with that. Do you use Quicken which is an excellent overall financial management program but is really lacking in the trading area?

Do you have a clue what your profit factor is? How about your drawdowns? If you can’t answer those questions you need to get a good trade management software package to help you better manage your trading business.

The problem is that of the few decent portfolio management programs on the market they mostly focus on trading account management and their reports are more account based than system based.

That’s fine if you are a discretionary trader or only trade one system but for those of us that trade multiple systems and accounts we need trade management software that allows for a more detailed view of our trading activities.

The only trading tool that I have found that will track multiple trading systems is Stator and I have used it for years now and have never had a problem with it. In fact, I just upgraded to the newest version and reports that would literally take 10 or more minutes are now generated in seconds.

With Stator you can track multiple accounts AND multiple trading systems by simply assigning a system to a trade when it is entered.

By doing that one simple step you can generate performance reports with just about every trading metric there is and really get an idea how your trading systems are doing.

For instance, you might have daytrading systems A and B and swing trading systems C and D defined in Stator. You can report on all systems combined, each system individually or you can set up two groups that shows you all daytrading or swing trading systems combined.

This is an extremely powerful reporting feature that showed me that even though one system I was trading was somewhat profitable my other systems were doing much better from a profit factor standpoint so I stopped trading that system and put my trading capital in the other more profitable systems.

If you are a system trader you really need to take a hard look at Stator and what it can do for your trading. The website has a demo available for download as well as some nice trading articles and the owner is a really nice guy.

If anyone knows of a better trade management package leave a comment and I will check it out.

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Trade Management Software is a post from: Trading Tools Report

Trading Tools Report » Trading Tools

Cheapest Stock Trading

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Cheap Stock Trading

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Insider Buying

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Cheapest Online Stock Trading

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Buying Stocks Online

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Nicolas Darvas and the Darvas Box Method

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Stock Trading Is Boring If You Are Trading Stocks The Right Way

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Stock Market Game

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Hot Stock Market Tips

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Trade Management Software

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