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Pay Per Share Brokers Vs. Pay Per Trade Brokers
Many beginners are unaware that there are critical differences between pay-per-trade and pay-per-share online brokers.
If your commission fees are based on pay-per-trade, then you are usually paying $5 to $10 per trade. Most amateur day traders use pay-per-trade brokers because they do not know about the pay-per-share alternative. I sure wish I had been informed about pay-per-share when I started day-trading stocks.
Why use pay-per-share firms? On average, you only pay .003 to .005 cents per share. That translates to paying, on average, 40 cents per trade, when you are trading in 100-share blocks.
On the other hand, if you place a trade of 100 shares with a pay-per-trade broker, you are usually charged a flat rate commission of $9.99. Compare that to a pay-per-share firm and this truism will hit you like a hammer.
If you place over 50 trades per day with pay-per-trade, imagine how gouged you will get by fees. Most active professional day traders, like myself, place at least fifty trades per day (25 round-trip trades). If they use a pay-per-trade broker, that is roughly $500 per day in paid commission fees. Trading through a pay-per-share broker, however, placing fifty trades per day in 100 share blocks, costs you only $15-30 in fees.
NOTE:
The commission rate varies depending on your trading activity: read more info on commision rates ..........and/or.........request more info
You can see just how crucial it is for a pro to use a pay-per-share broker. The day-trading seminars and training programs usually do not tell you about pay-per-share. The reason is that most training programs have contracts with pay-per-trade brokers. This enables such brokers to profit off you. They register you onto their trading platforms, during the training program.
When I think of that, the word racket comes to mind.
Pay-per-share firms usually do not advertise in prime time commercials, so you only hear about them from experienced people like me. Because they seek serious day traders only.
So if you plan on becoming a highly active independent day-trader, remember I told you about pay-per-share. Once again, find out whether the training programs teach you about pay-per-share. If not, hang up the phone.
Pay-per-share providers are usually referred to as Direct Market Access trading firms or Proprietary Equity trading firms, and they all offer real Direct Market Access trading platforms, with FAST KEY ORDER EXECUTION capabilities. This is what the real pros use.
What is the catch? Amateurs ask me.
First off, when you trade through a pay-per-share broker, there is no scammy catch at all. It is all about becoming more professional. If you plan on evolving to pattern day trade status, which means you plan to make several intra-day round-trip trades, then you need a pay-per-share broker.
One condition is out there that I suppose you could call a catch, but it is really a form of promotion: when you begin to advance as a day-trader, which naturally involves pay-per-share, you will find yourself being regulated by the S.E.C.
Main reason that usually scares off amateur day traders:
- To begin intra-day trading, the S.E.C requires you to have a minimum of 25K. The balance of your account cannot fall below that when intra-day trading stocks. If it does drop below that amount, you get hit with an equity call. That means that you can not trade on margin, and you can not intra-day trade until you deposit enough funds to return your minimum balance to 25k.
Although, there are other pay-per-share options that only require a $5,000 minimum, and they offer the LIGHTSPEED trading platform, Please contact me for more information on these brokers.
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