Save Money: The Easiest Way to Increase Profits

Advice for rookies:

2DollarBill


Traders and investors are always on the lookout for a way to save money.  The simplest way to do that is to choose a broker with the lowest commissions.  But before you take that leap, remember that there's more to brokerage service than the commissions.

Some brokers provide extra services – and these may be services you want.  It's okay to pay higher commissions to get a good trading platform, or excellent risk management software, or best of all -  execution of your orders at great prices.

If you usually keep a large cash balance with a broker, look for one who pays higher interest rates.

If you are an active trader, ask for a commission discount.

When you enter an order, give yourself the opportunity to buy/sell at a better price by bidding less than you are willing to pay.  This may seem obvious, but too many rookies feel the need to buy 'this instant.'  Never use market orders when trading options.

When the order is entered at a better price, you can always change your bid/offer after 10 seconds as you inch up towards the real price you are willing to pay/receive.  This truly is a good method to save real money.  Be careful: some brokers charge a fee every time you change an order.

Please don't try to squeeze a few extra dollars out of a trade when your risk manager (that's you) says that it's time to close a position.  Don't hold out for that last nickel when there's so little to gain and so much to lose.  When talking about money-saving ideas, I am not referring to ignoring risk management.  That's still the most important part of being a successful trader.

For more on this topic see my articlein SFO (Stocks, Futures, and Options) Magazine.

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