day-trade-losses copyIn my experience and on the advice of professional and long time investors, day trading is not a good idea for the layperson. But, if you’re going to trade stocks, I recommend looking into Robin Hood. Robin Hood is a fairly new online stock trading app that lets people trade stocks for free. Completely for free.

It is a shake up in the landscape of stock trading platforms because it is the first major company to offer this. Other prominent companies that offer trading services like Capital One, E-Trade, TD Ameritrade, Scottrade, etc. usually have fees ranging from $4.00 – to $10.00 for basic trades, and all kinds of variables on those prices for more “complex” trades. If Robin Hood gains enough traction, it could seriously influence the ability of these companies to continue charging high trade fees.

The company primarily makes money through the interest earned on customers that sign up for margin accounts, and on the excess cash left in investors accounts (not a charge to the investors). For people looking to day trade, it is clearly a better option. Let’s take Capital One’s service as an example. Capital One charges $7.00 per trade. In day trading, the stock is going to be bought and sold, that means for one trade, $14.00 is being spent. On a large trade, expected to gross $1,400.00, that is a 1% loss for a fee. That can be a lot of money over time. Smaller trade amounts can have the profits entirely eaten away by the fees. Lets say you are trading with $15,000.00 and buying google stock. Google is hovering around $750.00 per share right now and fluctuates roughly 1% of the share price every day. So, assuming one could scoop off $5.00 per share at 20 hares, that’s a $100.00 profit. A solid 14% of the profit is eaten up by the fees for the trade.

Once again, day trading in my opinion is not a good idea, but, if you have to try it. Look into Robin Hood first.

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