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How do traders avoid paying huge amounts of brokerage? (1 Viewer)

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Hi guys, I'm a newbie and I had a look through some of the sticky threads but couldn't find my answer there.

What I don't understand in short term trading is how people avoid paying huge amounts of brokerage? For example I have some shares I bought a while ago using Nabtrade for buy-and-hold investing, and my nab trade account charges $15 per trade. I know there are cheaper versions out there, but I thought it was in the vicinity of $10 per trade still.

Are there trading programs out there that somehow minimise this brokerage? Or is just part of the tax day traders have to pay alongside any profits they make?
 

Trembling Hand

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Re: Something I don't understand in trading

Hi guys, I'm a newbie and I had a look through some of the sticky threads but couldn't find my answer there.

What I don't understand in short term trading is how people avoid paying huge amounts of brokerage? For example I have some shares I bought a while ago using Nabtrade for buy-and-hold investing, and my nab trade account charges $15 per trade. I know there are cheaper versions out there, but I thought it was in the vicinity of $10 per trade still.

Are there trading programs out there that somehow minimise this brokerage? Or is just part of the tax day traders have to pay alongside any profits they make?

To trade short term, especially stocks, you need to be trading large enough that $10 brokerage fee is only a small % of the trade,

$10 of a $500 trade is 2%
$10 of a $10,000 trade is 0.1%
 
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Day trading you have to think like a business. Brokerage is a fee for service, basically an overhead of the 'business'. Minimise it by making larger transactions so it becomes a very small overhead.


pinkboy
 
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Ah it is as I expected then, and I'm not missing out on some key piece of the puzzle. Thanks very much for the swift responses
 

skc

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Hi guys, I'm a newbie and I had a look through some of the sticky threads but couldn't find my answer there.

What I don't understand in short term trading is how people avoid paying huge amounts of brokerage? For example I have some shares I bought a while ago using Nabtrade for buy-and-hold investing, and my nab trade account charges $15 per trade. I know there are cheaper versions out there, but I thought it was in the vicinity of $10 per trade still.

Are there trading programs out there that somehow minimise this brokerage? Or is just part of the tax day traders have to pay alongside any profits they make?

0.11% is the norm with the big 4.

If you are trading only intraday and have the risk management skill to use leverage, then you can use CFD's and get the brokerage down to 0.1%, or 0.08% with a larger account, or <0.07% for those who are very active (say >$5m per month turnover, but don't hold me to that).

It can get even lower but you will start to go into professional / institution territories which isn't readily available to everyone.

But all else being equal, the shorter the timeframe and the smaller the movement you are trying to capture, the more brokerage will be as a % of your P&L.
 

pixel

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0.11% is the norm with the big 4.

Open Markets charge 0.07%, with $13.95 minimum.
However, if I take a dozen bites at the same cherry, I'm still only issued one contract note with one brokerage fee calculated on the total value traded. And yes, it's part of the overall business expenses.
 

skc

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Open Markets charge 0.07%, with $13.95 minimum.
However, if I take a dozen bites at the same cherry, I'm still only issued one contract note with one brokerage fee calculated on the total value traded. And yes, it's part of the overall business expenses.

Sorry off topic. Are these guys CHESS sponsored? And where do they hold your cash? Or can you have a linked account for settlement purpose?

thanks
 

pixel

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Sorry off topic. Are these guys CHESS sponsored? And where do they hold your cash? Or can you have a linked account for settlement purpose?

thanks

They do hold a full license and all my holdings are CHESS sponsored in my name. btw, they also trade the NSX and are about to add more exchanges. Call them for details.
My cash is where it's been for decades: Macquarie Bank. But they will happily transact with other banks.
 

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