Types of Trading Commissions and Fees

If a person decides they want to try their hand at day trading, there are a number of factors and considerations they will have to understand. In most cases, hiring a professional brokerage firm to help with the process is the best course of action. When this is done, there will be two types of fees that the client is charged – non-trading fees and trading fees. Learn more about each of these here.

The trading fees, just as the name implies, are associated with the trading part of the business. Here are the most common fees that a person will be charged by a brokerage firm.

Flat or Fixed Fee

With a flat or a fixed fee, the person is only going to charge a single fee each time they make a trade. This is true if they are trading a single share or hundreds of shares of the same type of stock. With this type of fee structure, the client will have to pay for both selling and buying (opening and closing the trade). This means if there is a fixed fee of $3.95, this will be what is paid to buy and to sell.

Percentage or Floating Fee

With this scheme, the brokerage is going to charge a percentage of the actual trading volume as their commission. This will usually only be the situation if a person is working with a higher end broker. In most cases, the floating fee will be that the brokerage charges 0.5 percent of the trade’s value.

Tiered Fee

A tiered fee is a way that a brokerage charges that is based on the total number of trades that a client makes. In most cases, with this model, the higher the number of trades that a trader makes, the lower their per trade cost is going to be.

Understanding trade fees is essential for anyone who wants to get into this business. More information about trading can be found by taking the time to Find Rockwell Trading on Facebook. Being informed is the best way to become a successful day trader and make money along the way.