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How to Start Trading Stocks for Free

Published October 10, 2019

4 minute read

By Jim Greene

Banks and brokerage firms typically charge online traders a fee to buy or sell securities. In most cases, these fees seem relatively small. They usually come in around the $10 mark. However, they are applied to every single transaction you make on both the buying and selling sides. If you’re just getting started with stock market trading, you’re probably limiting yourself to modest sums of money. That means these transaction fees, when viewed as a percentage of any profits you’re lucky enough to make, can add up to a lot more than you’d care to pay.

There are alternatives available. Services that offer legitimate, secure online trading with no fees. Many new mobile platforms offer transaction-free trading, while some brokerages and investment firms now feature limited-time promotions that eliminate transaction fees up to a certain limit. Some companies also allow traders to buy and sell certain classes of securities free of charge. Here’s how to get started.

Try Robinhood

Profiled in a 2018 Forbes article on free stock trading, Robinhood is a mobile stock trading platform with a stripped-down profile that only delivers essential features. It’s free to download and use. Traders pay $0 in commissions when buying or selling. Users also don’t have to maintain a minimum balance to enjoy fee-free access. Transactions cost nothing, regardless of how much or how little money you have in your account.

The innovative company turned a lot of heads in the financial services industry when it was launched. Some insiders predicted it would soon be scooped up by a major brokerage looking to cash in by appealing to younger demographic groups. It is extremely popular and reportedly has a waiting list with over a million people on it.

Robinhood uses an ingenious model to generate revenue. It simply earns interest on the funds in depositor accounts. Experienced investors and traders seeking advanced functionality can also purchase a subscription to the Robinhood Gold upgrade. It offers margin accounts that enable customers to borrow funds for leveraging.

Get on Matador

[Editor’s Note: The actual trading app has been renamed to Public.]

Matador is another worthwhile entry in the free stock trading space. Like Robinhood, Matador offers bare-bones functionality. Matador only links to limited charts and basic essentials about companies, like price-to-earning (P/E) ratios and other high-level summary information. That means you’ll have to do most of your due diligence research on another platform. However, buying and selling securities is completely free. Matador also supports social and community elements that set it apart.

On Matador, users can make friend connections with others, just like on Facebook. Friends can view each other’s holdings, exchange tips and info, and help each other find stock ideas. Users also benefit from a news aggregator, which compiles market information from around the world. Heavily traded stocks get profiled in the news feed, helping users understand what’s trending. You can also use the feed to spot opportunities to earn profits on rallying stocks, or to short stocks that are falling in value.

Register With Merrill Edge

You’ll need a decent chunk of change to trade stocks for free with Merrill Edge. However, the platform is well worth considering if you can meet the minimum requirements. Merrill Edge is owned and operated by Merrill Lynch, one of the world’s leading investment banks. The service was launched in 2010 and supports a Preferred Rewards feature. Preferred Rewards apply to balances of $50,000 or more, and offer a healthy number of free trades each month.

If you have between $50,000 and $99,999 in your Merrill Edge account, you can make 30 zero-fee transactions per month. At $100,000 and up, that number rises to 100 free monthly transactions. Day traders may use up that many monthly transactions, but even 30 is far more than the average retail investor would ever use.

More Ways to Trade Stocks For Free

Well-established banks and brokerages routinely feature promotional offers designed to attract new customers. Many of these offers deliver reduced-fee or free trading for a limited time. If you prefer to use a platform with name recognition, this is a good path to consider. Available offers change all the time, but investment banks like Fidelity and Charles Schwab are both known for providing 100 to 500 zero-fee trades to anyone who deposit at least $50,000 in their accounts.

You’ll have more options at your disposal if you focus on specific kinds of securities. For example, NerdWallet recently profiled Vanguard Brokerage, which allows customers to invest money in 50 popular exchange-traded funds (ETFs) free of charge. However, if you pursue this option, carefully review the associated terms and conditions, as other kinds of trades might cost you money. In some cases, fees for other transactions may be significantly higher than you would pay on a regular fee-charging platform.

Final Thoughts for New Traders

Stock trading is an exciting and potentially lucrative investment vehicle. It also comes with a lot of risk. Committing money to the markets is a major decision, and market forces can be volatile. Always perform thorough research into any company you’re considering. Never make a trade before doing your due diligence. You may be tempted to hop on the bandwagon of a fast-rising stock, but the tides can turn just as quickly, putting your capital at risk.

Experts recommend practicing with imaginary money to learn the ropes before using real capital. Leave advanced strategies like derivatives trading and leveraging for later, once you accrue the experience to use them. Proceed slowly and with caution until you have confidence in your investing knowledge and skills.

One last thing: Some of these apps and services are only available in the United States, thanks to complicated international finance laws. If you live outside the U.S., you may have to do some more research on what similar services are available in your region.

Trading Stocks on Mobile Phone

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Contributor

Jim Greene is a freelance writer based in the Toronto, Canada area. He has been writing professionally since 2001 and has an extensive professional background in consumer research, personal finance and economics.

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