Broker Commissions

Brokers charging you for facilitating the buying or selling of shares is called Broker Commissions. There are two main ways you can be charged Commission: Per Share and Per Trade:

Per Share Commissions

Per share, a commission is an act of charging a rate per shares for each transaction that you trade. So commission on trading 100 shares is less than trading 1000 shares.

Example: Commission is at .05 cents per share.

100 shares would cost 50 Cents

1000 shares would cost $5

Tiered commissions

Tiered commissions are based on the volume on a per shared commission broker. So the more you trade in a month, the lower the rate.

Example: Commission is at .0035 per share if you trade under 300k shares in a month, or .0005 per share if you trade 100M shares in a month.

100,000 shares traded in a month would cost you either $350 or $50, depending on your volume on the above example.

Minimum Commissions

Be mindful of brokers and their minimum commissions. Some Brokers will have a minimum commission charge of $1-2 if your share size is too small.

ECN Fees

When a trader "removes liquidity" by buying on the "Ask", or selling on the "Bid", some Brokers will charge an ECN Fee. Some will also offer a rebate.

 

Brokers that charge Per Share:

Interactive Brokers

Lightspeed

Trade Station

Per Trade Commissions

Per trade, Commissions is a flat rate traded, regardless of the size of the shares. Some brokers incorporate their flat rate based on the amenities that the broker offers. Some include Stock Market Data for free and charge a higher per trade commissions, and some provide a lower rate but charge you separately.

Prices of per trade are usually between $3 at the lowest (eoption) to $9.99 (TDAmeritrade). The difference is the platform and data fees that are either optional or built into the per trade.

Combination of Per Share and Per Trades Commission

There are a few brokers that will charge you a small per trade commission AND a per share amount. The Per trade Commission is typically lower than the flat rate.

Example: $2 per trade + .005 Cents per share traded:

100 shares traded = $2.50

1K shares traded =  $7

10K shares traded = $52

Conclusion

Per share, Commissions are great for those who trade in lower quantity because either you are new or the price of stocks is high. Per Trade commission is great for those who trade in large sizes because of experience or lower priced stocks. Keep in mind the other tools that your broker provides (Platform, data) and compare to your goals as a trader.

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