Trading stocks include not only ups and downs but also a lot of associated costs in the form of commissions. Regardless of whether the transaction brought a trader a profit or loss, they need to pay a commission fee for it. However, to encourage cautious clients, brokerage houses offer the opportunity of commission free trading. For this possibility to be applied, there is a special area of action, outside which, the fee still has to be paid. But if a trader conducts their operation within the framework of the proposed conditions, they will be able to significantly save on their expenses.
What Conditions are Offered for Commission-free Trading?
- The first main condition concerns the lack of leverage. Under normal conditions, it allows the trader to significantly increase their profits through the use of borrowed funds. If you have not yet learned how to use leverage, learn how to start trading and try to apply it to a micro (cent) account. In the case of using the possibility of commission-free trading, the leverage is 1:1, i.e., the lot is placed entirely at the expense of the trader.
- The second important condition is that without a commission, you can only buy shares but not sell them.
- The third limitation — the broker determines those financial instruments that can be purchased in accordance with this offer. For example, it can only apply to real shares of US companies.
- The offer is valid only for transaction fees, but you still have to pay all other fees. They include taxes and commissions for deposits, conversions, and withdrawals.
Benefits of Commission-free Trading!
- This offer is especially beneficial for those traders who are focused on investing in instruments that are offered by the broker as being subject to free trading.
- Also, those traders who do not want to risk trading with leverage can take advantage of these conditions.
- For traders who are going to trade a large volume of stocks, this offer will also be interesting. There are no restrictions on the volume of the order, so saving your own funds on commissions, in this case, will be significant.
By experimenting with different offers from a broker, you will eventually find the trading option that will bring you the maximum profit. By accepting commission-free trading, you won’t have to give up anything or change anything about your account. Think of it as a promotion to generate additional profits to encourage you to trade on your main account.