The Costs Of Trading

You may have relatives or friends who act in the markets. To do may in stocks, futures, options or currencies have. You may have heard stories of their trading partners, exciting and perhaps have aroused your interest and you wondered if you trade too much. One of the first questions that you could before the exchange: What are the costs of trading.

The trading costs depend on several factors, including the instrument and the market to trade. Most costs will be paid to your brokerage firm. You have to make their livelihood in exchange for their services.

In general, one would expect that the following costs:

  Commissions

  Slipping

  Spread

  Platform Fees

  Expense

Commissions

These costs are charged by brokers. The commission you pay is usually calculated as a percentage of the size of your company. For example, if you buy or sell $ 10,000 worth of shares, the broker may charge 1% of it. You can also charge levels: for example, if you buy or sell shares for a total market value of less than $ 10,000, then your broker can give you $ 30 If it's less than $ 20,000, the $ 50 charge can. So, if you bought $ 5,000 worth of shares, you would still pay $ 30 fee. And if you do $ 12,000 worth of shares purchased would have to pay the Commission $ 50.

Slipping

The price of a commodity is always in motion, open up the market. Therefore, if the price quoted at $ 10 a share now, does not mean that if you decide to buy, you buy these shares at $ 10 each. If you put in order and it is filled, the market price has already changed. If you had to buy the shares on your order filled at a price of $ 10.25, and you have 100 shares, then the entire cost of shelter is $ 25 (including 100 shares * $ 0.25). If you had the same spin, as you are selling, then slide the entire cost of entering and exiting the market would be $ 50 (the $ 25 * 2 trades is).

Spread

The spread is the difference between the tender offer to purchase and sale of such goods. If the buyer is willing, more eager to buy for each U.S. Dollar Australian $ 0.7500, but the more eager the seller is willing to order it for $ 0.7510 per sale in Australia, then there is a spread of 10 pips. These 10 points are referred to as a spread. If you bought 100 000 USDS, the distribution cost would be $ 100 Australian. (Pips are discussed in the book. Part-Time Currency Trader)

Platform Fees

Some brokers will charge you monthly to use their trading platforms.

Expense

These include costs associated with your business training, how to buy books, commercial software, data subscription, and so on.

Some people can 'brush', as these costs are due to the low cost of fun, as well as the coins are put into slot machines. However, if you want to trade as a business look, you need to reduce to a minimum and ensure that you spent for every dollar in order to secure the long-term survival.