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Cheap Stock Trading

For some reason a keyword that is commonly searched to reach my site is invest 5 dollars.  Now I don’t know if people are looking for stocks under 5 dollars (penny stocks) or they only have 5 dollars to invest, but either way cheap stock trading is a very hard way to go.  The numbers are stacked against you.  However, if you’re looking for the cheapest online stock trading then you’ll probably have a hard time beating $7 a trade that’s unrestricted.  I’m pretty sure Sharebuilder still does $4 trades, but they have an odd execution platform.  Generally they don’t trade all the stocks and they have set buying window, definitely geared for people with a very long term mindset.

If you’re looking for cheap stock trades you could always look at buying way out of the money (OTM) options or puts.  On a really volatile stock you could buy options for .05 per 100 ($5 per option plus fees) and the minimum they could move is a nickel so you lose it all or double your money.   Trading the Nasdaq index (QQQQ or “the Qs”) was very popular in the late 90s early 2000. 

Your other option is to buy one share of a cheap stock, but with trading cost this is only worth it if your buying a gift for a friend, not as an investment.

The bottom line is even with cheap stock trading online cheap stock trades just aren’t cheap.  Cheap stock trading just doesn’t exist you have to have enough money to handle the ups and downs, market maker spreads, commissions, taxes, and make it all worth your time.  I’m very hard on these costs because I think most new stock market investors overlook these and they don’t realize how much they eat into their returns.  I want you to win.  If you’re looking for a way to invest your five dollars please put it in your savings account, pay it on a debt, or put it in a retirement account and when you’ve saved your first $1000 then it’s time to start looking how to trade.

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This entry was posted on Tuesday, October 13th, 2009 at 9:37 am and is filed under Money Management. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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