Online Trading Keeps Getting Cheaper
When I first started trading stocks in the early
Before online trading, the only way you could place an order was over the phone or in person. I’ve heard that those trades cost over $100 each. And I believe it, since even today, brokerages charge around $30 to $50 to place a broker-assisted trade over the phone.
Fortunately for us Wolves, we execute all of our trades online. Standard trading fees are around $5 to $7 and there are even companies like Robinhood that charge zero trading fees on stocks and options.
If Fees Are so Low, Then Why Does It Matter?
The table below is my estimate of annual trading based on the type of trading style. I personally fall into the long-term investor category with some swing trading tendencies.
|Type Of Trader||General Holding Period||Trades Per Year|
|Long-Term Investor||Months to Years||0-30|
|Swing Trader||Weeks to Months||30-300|
|Day Trader||Days to Weeks||300-30,000|
If you only make 10 trades a year, you may think that it doesn’t matter much to save a few bucks off your commission fees. But I definitely think it’s worth it to save even $70 a year with a simple phone call.
I have nothing against my brokerage making money. They’re a business that provides a great service to investors. But I’d rather put that extra $70 into a low-cost index fund than hand it over in fees.
The Phone Call
My phone call was with TD Ameritrade regarding my Roth account. I also have a Traditional IRA and a regular account with them. But both are inactive and not funded.
The phone call went something like this. I called and got a real person on the phone within a minute – Jennifer. Once Jennifer verified my identity, she asked how she could help me.
Me: “Hello, Jennifer. I’d like to know if it’s possible to lower my trading fees.”
Jennifer: “I can certainly connect you to someone who can help you with that.” I forget the title of the person she connected me to, but I’ll call him Master Trader Jeff.
Me: “Thank you.” Then I wait about 1 minute and get on the line with Master Trader Jeff.
Master Trader Jeff: “I hear that you’re looking to lower your commissions. I can help you with that. What did you have in mind?”
Me: “I didn’t have a specific number in mind, but I have an account with Robinhood. As you may know, Robinhood charges zero fees. I also have an account at Fidelity which charges 4.95 per trade.”
Master Trader Jeff: “We can’t give you zero fees for good reason, of course, but I’m very certain we can get you $4.95 per trade. Let me look at your account.” At this point, Jeff was looking for as much information from me that he could submit to “the powers that be” and see what adjustments they could make.
Master Trader Jeff: “I see that you did about 30 trades last year. Is this typical? I also see that you placed an options order recently. Were you looking at doing more options? What price would you need to move your funds over from Robinhood?”
Don: “Yes, 30 trades a year is pretty typical. I occasionally trade covered calls. I’d be more inclined to do more covered calls if the trading fees were lower. Since Robinhood offers free trades I’d only be willing to move my funds over if you guys can offer $1 trades.”
Master Trader Jeff: “Sorry, we can’t go that low. I’ve only heard of $1 commissions for traders who make 1000 trades a month.”
Me: “No problem.”
Master Trader Jeff: “Let me see what I can do to lower your trading fees. If you don’t hear anything from us, feel free to call back in a couple of days to check the status. I’m pretty sure we can lower your stock and options fees.”
Me: “Thank you.” And we part ways. Total time on the phone was about 10 minutes.
A couple of hours later, I get an email from TD Ameritrade Client Services with the subject, “Important: Your New Commission Schedule.”
They posted the new schedule in my account in the Message Center. Here is a summary.
|Description||Old Commission||New Commission|
|Stock Orders (Online)||6.95||3.95|
|Options (Online)||6.95 + 0.75 per contract||3.95 + 0.50 per contact|
The Bottom Line
TD Ameritrade is a great company that was willing to lower their already low fees with just a 10-minute phone call. I’m not even a high volume trader.
If you want lower commissions, I highly recommend giving your brokerage a call since you’ve got nothing to lose.
Tell me what you guys think. Comment below and let me know if you were able to get an even better deal from your brokerage! If you know others who would benefit from this article, share it on social media.
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Donnie Nguyen is the founder and CEO of Wolves of Investing. He started investing in the stock market in the early 2000s. He follows the teachings of Peter Lynch, Warren Buffett, and other investing legends. When he's not investing or blogging, he loves spending time with his family traveling and experiencing the world.
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