Wednesday, July 21, 2004
Apparently, there is a new game in town. It's a group called Interactive Brokers. They claim that they will trade for one dollar per hundred shares. They charge a minimum of ten dollars per month. The thing is that this is great news to the active trader. If you buy one stock a month, then stick with Scottrade. Here comes the math.
If you buy a hundred shares with a seven dollar commission and sell it with the same seven dollar commission, then you need the stock to go up 14 cents to be profitable. (Fourteen cents times 100 shares equals fourteen dollars.) With a one dollar commission, then you only need to go up by 2 cents. That's the thing is that you can lower how much money you need to make. That one dollar commission is one dollar per hundred shares. So if you buy 200 shares, then with Scottrade you need only seven cents. With this Interactive Brokers then you get charged two dollars, but you still only need to go up two cents. Scottrade pulls into the lead when you buy and sell more than seven hundred shares. Of course, Scottrade also works to your advantage if you are not very active. If you, do one trade a month or less then go for Scottrade. If you are doing two, then go with Interactive Brokers. I'm afraid it's all very complicated. I haven't even found out what all of Interactive Brokers fees are, but then again I use Scottrade and am not really sure what all of their fees are.
The only way to get cheaper is to go with a Market Maker. Then you don't seem to pay any fees. (Of course you do. You just never see it. They make money between the bid and ask price.)
Today's buzz word of the day is Microsoft. I have GOT to watch the market today. (And possibly sell my gas stock and buy some.)
If you buy a hundred shares with a seven dollar commission and sell it with the same seven dollar commission, then you need the stock to go up 14 cents to be profitable. (Fourteen cents times 100 shares equals fourteen dollars.) With a one dollar commission, then you only need to go up by 2 cents. That's the thing is that you can lower how much money you need to make. That one dollar commission is one dollar per hundred shares. So if you buy 200 shares, then with Scottrade you need only seven cents. With this Interactive Brokers then you get charged two dollars, but you still only need to go up two cents. Scottrade pulls into the lead when you buy and sell more than seven hundred shares. Of course, Scottrade also works to your advantage if you are not very active. If you, do one trade a month or less then go for Scottrade. If you are doing two, then go with Interactive Brokers. I'm afraid it's all very complicated. I haven't even found out what all of Interactive Brokers fees are, but then again I use Scottrade and am not really sure what all of their fees are.
The only way to get cheaper is to go with a Market Maker. Then you don't seem to pay any fees. (Of course you do. You just never see it. They make money between the bid and ask price.)
Today's buzz word of the day is Microsoft. I have GOT to watch the market today. (And possibly sell my gas stock and buy some.)
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