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In terms of stock trading, there are now many stockbrokers offering free trading opportunities to clients who want to be more independent, alongside their traditional broker services. Although there are still some costs for you to take into account, we hope this guide will give you some valuable insights into the choices out there.

Two terms you are likely to come across when looking for a stockbroker are ‘full service’ and ‘discount’. The former means that they take control of your investment and will offer you advice on the best investments. Discount brokers do not include advice in their packages, they are more cost-effective, provided you have a reasonable level of knowledge.

Our in-depth reviews clarify how each broker structures its fees and uncover any that we consider are not made entirely transparent to potential clients. For you, this means that a broker on our recommended list is proven to offer the best value and services to a range of clients, making your choice much easier.

In this article, you will learn:

  • The different levels of service a stockbroker provides
  • What to look for when choosing a low-cost broker
  • How we review and recommend stockbrokers

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Risk Warning / Ad Disclosure

Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.

Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.

The Best Low-Cost Brokers

Low Cost

It is a difficult, if not impossible task to directly compare a list of stockbrokers in terms of cost, as each will have a unique fee structure. It is more a matter of honestly assessing your stock trading goals and then finding the broker that is the closest match.

Check Their Reputation

This is perhaps one of the easiest tasks for you. It is very easy to check out a stockbroker’s credentials as they are required to make their business affairs publicly accessible. If you do not want to do it yourself, then scan through our review section, you will never find a broker on our recommended list that does not have a long-standing and faultless reputation.

Is The Service Limited

As we explained previously, a low-cost or discount broker will not offer you advice on good or bad investment choices. Their task is simply to provide you with a platform and the minimum tools necessary which enable you to trade on the stock market. It is entirely up to you to make sure that you have sufficient knowledge and experience to make the most of this type of stockbroker service.

Compare Other Features

Sometimes it is best to move away from examining fees such as cost per trade, or commissions and to look instead at other benefits a broker has on offer for its clients. For example, having access to a free platform or a range of free signals and indicators could be far more valuable in the long run than a slightly lower commission rate. We like to see brokers who offer educational content and other ways to support their clients.

What Are The Hidden Costs

There are far more expenses involved when stock trading than for most other types of retail trading. These can include charges for any off-platform trades made by phone or e-mail, foreign dealing supplements for accessing certain international stock exchanges, platform or trading tool subscriptions and custody, administration and withdrawal fees.

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Why Use a Low-Cost Broker?

There is certainly nothing wrong with keeping your trading costs to a minimum and some free and low-cost stockbrokers still offer a great client service, If you feel you have sufficient stock trading knowledge, are looking to maximise your investment and feel confident in your trading strategy then it can be a great way for you to go.

There are various ways that brokers can offer free trading. In some cases it is by offering a more limited range of stocks, adding a small levy to the share prices or by bulk processing orders. To offer clients zero-commission trades, brokers cover their costs by charging a fixed monthly fee per account. This approach means you are clear on the costs involved and will not find any nasty surprises on the quarterly invoice from your stockbroker, which can impact your profit margin.

Whether you ultimately choose full-service, a discount or even a free broker, the choices you need to make then come down to more basic matters. These will include the minimum investment needed to open an account, your trading platform preference, access to trading tools and the level of support you are going to need to be a successful stock trader.

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Low-Cost Broker Tips

It is not difficult to see that fees can soon mount up in the stock trading world, but there are certainly ways they can be offset to some extent. One point to note is that stockbrokers react differently to changes in the world economy. Whilst some will sit tight and hold their fee structures, others will go up or down with each change. It might help you to think of it in the same way as a fixed-rate or variable mortgage works and the effect (or not) changes in the economy make to your monthly payment.

Your intended level of trading is another major factor in overall trading costs. Rather than free trades, some stockbrokers offer discounts or other benefits for a certain number of trades made in a given period. To give you an idea, the number can range from as low as three to as high as twenty-five separate trades in the previous calendar month to qualify.

Before you jump in and sign up for an account with the stockbroker that appears to be the cheapest, we recommend that you first ask yourself these questions:

  • Be honest, is your level of expertise suited to a discount broker?
  • Can you cope with the technical aspects of the broker’s platform?
  • Will you be making enough trades to qualify for further benefits?
  • Do you know enough about the stock market to make wise investments?
  • Have you defined your trading strategy and goals?

If your answer to any of those questions is no, then we advise you to look again at the big picture and to consider offsetting the value of higher quality service against a lower fee structure, at least until you have more experience.

We always urge traders who are contemplating investing in any type of trading instrument to proceed with caution and to do their homework.

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Our Recommended Shortlist

We always urge traders who are contemplating investing in any type of trading instrument to do their homework. Because stock trading generally requires much higher levels of investment and is a longer-term prospect, it becomes particularly crucial to gain as much knowledge as you can in advance. We hope that by reading our guides and broker reviews we can ease the burden of trying to find accurate and current information because you can find it all in one place.

As you can see, even from the relatively brief information we have given you in this guide about low-cost stockbrokers, it is still a daunting prospect to try and decide which of them is the most financially viable as well as being suited to your trading requirements. Unfortunately, we are not in a position to make the final decision for you, but we hope to have made it an easier one by narrowing down the field with our stockbroker review pages.

Our panel of reviewers are also all experienced traders and know exactly what to look for in terms of the best stockbroker services for retail traders. Not only do they examine each broker’s fee structure and what it means to you in terms of trading costs, but they also look at the overall picture of the services provided as well. These include (but are not limited to) trading platforms, available markets, educational provision and the all-important customer support.

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Risk Warning / Ad Disclosure

Risk Warning: The products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never risk money that you cannot afford to lose.

Ad Disclosure: Some of the links that you will find on this website are advertisements for which we do receive financial gain for referring new customers.

Frequently Asked Questions

FAQ

Are these broker accounts always free to use?

An account which initially gives you this benefit is subject to change under the stockbroker’s terms and conditions, this can be for many reasons and be applied at any time.

Do all brokers offer these free account types?

Unfortunately not at the time of writing. Stockbrokers vary a great deal in the services they make available to their clients and is a subject we cover in our broker reviews.

Can I use a demo account with a low-cost broker?

Not always. Some brokers offer paper trading and simulation opportunities, while others focus on clients with more experience, or who are seeking a full-service account.

Are all assets available with this broker type?

Some stockbrokers offer both full-service and discount accounts, with different fee structures, but generally, the same assets are available to you. For free accounts, it is sometimes a little different and depends on the broker you choose.

Is there any time restriction when live trading?

There is no simple answer to that question, stockbrokers will apply time restrictions as and when they feel the economic situation calls for it. The important thing is to always keep up to date with global economies and be a step ahead.

Meet The Author
Marilyn Powell
Marilyn Powell
Financial Analyst

Marilyn won’t mind us saying she’s our resident geek. She spends most of her time recommending various investments to her clients based on their financial goals and how risky an investment strategy they are interested in undertaking.

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