May 7, 2009

You Broker and Transactions fees

A lot of people want to invest in the stock market, but I’m seldom sure that they know how they can do that. The first thing they need to know is that you need a broker to start investing in the market. The second thing is that they have to do a lot of research.

So how does one get started with trading? Many important financial institutions offer brokerage services to their regular clients and some independent brokers offer the same service. The first step is to open an account and then fund it. Pretty quick isn’t it? As soon as that is done, a trader can start investing.

Now there is a lot of choice available to investors, retail brokerage houses offer services ranging from 20$ to 30$ a trade. If you have been following the Q1 results of most banks in North America, you surely have heard that they showed the biggest increase in revenues compared their first quarter last year. A big chunk of those revenues actually came from their brokerage business, more precisely, from all the trades on all the trading of stocks and government bonds. Their profit margins must be appreciable since many independent brokerage houses offer the same services for a fraction of the price.

Right about now, many must wonder where it is possible to have a brokerage service that asks less than 20$ without having the usual minimum 100000$ or 150 trades per quarter? Being a value investor, it is pretty clear that the number of trades that I make around one per month or less. Doing business with a broker that allows a low volume of trades with a minimal fee is the option that makes perfect sense for me.

When i started looking for a broker, my first thought fell on E*TRADE, but their fee structure and, in my humble opinion, their poor service to help me get started with an account made me think that they were not the best choice for me. Fortunately, I fell, with enough luck, on a internet ad about an independent Canadian broker that goes by the name of Questrade.

What amazed me was their very flexible fee structure. It thinks as much about long term investors as much as about frequent day traders. They charge 1 cent per share on each trade, for a minimum of 4.95$ to a maximum of 9.99$, with no minimum required balance.

I have been a client since September 2008 and I have been incredibly satisfied with the swiftness of execution of my trades and their useful live costumer service. For those unsatisfied with their current broker, you can find more information on their website :

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