Comment by matwood
Comment by matwood a year ago
Trading fees are at or near zero in the US now unless you mean capital gains.
Comment by matwood a year ago
Trading fees are at or near zero in the US now unless you mean capital gains.
10+/trade is going back to the early 2000s for the US.
Now it's effectively 0 for most common trades. Here is Schwab for example:
https://www.schwab.com/pricing
If someone is a big options trader they can probably find a better per contract price out there.
How do they profit? There must be a cost somewhere? Another reply mentioned spreads - still a cost (you lose money when you trade).
AUM, managing high wealth clients, running their own funds with expense ratios (also some of the lowest in the industry), uninvested cash, etc... Retail trading is commoditized now.
Anyone who really cares about spreads will be using limit orders. Otherwise you're talking about pennies on highly liquid shares.
The fact that we're even discussing the possible spread differences between market makers shows just how commoditized retail trading has become.
the sell order flow to market makers who gobble up the other side of bad retail trades
All the major US brokers started doing free trades for stocks and etfs. For Vanguard, most of the index expense ratios are really low, like %.05 percent, but that’s not a trading fee.
You also pay a spread every time you trade, especially if you're using a retail brokerage like robin hood that sells order flow to market makers.
It doesn't show up anywhere in your statement, but it's a real trading fee nonetheless, so it's still better not to trade too much
The explicit fees are near zero, but if you watch your trade you always get an adverse price.
If you’re trading US large-cap stocks at low frequency these are not really material costs for even a wealthy retail investor. Certainly not next to taxes.
Not what I meant, but capital gains are another issue, but I am not in the US. In the UK we pay a 0.5% tax on ever transaction and often around £10 per transaction, so its quite substantial. I should probably have said costs, not fees.
How much are total costs in the US?
If you trade frequently even low costs add up. If its 0.1% and you trade monthly it ends up being 1.2% over the course of an year.