Comment by graemep

3 days ago

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.

26 comments

graemep

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matwood  3 days ago

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.

  • graemep  3 days ago

    How do they profit? There must be a cost somewhere? Another reply mentioned spreads - still a cost (you lose money when you trade).

    • eru  5 hours ago

      Low cost brokerages mostly earn money from the interest rate differential, ie what they pay from your un-invested balances vs what interest they pay you.

      They also earn some money from 'payment for order flow'.

    • matwood  3 days ago

      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.

wil421  3 days ago

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.