When you first start trading, you might be shocked at the fees that are involved. You think that every positive trade that you make will give you a full return and you don’t calculate the costs into your trade. This can lead to profit levels not being as solid as first thought, especially if your profit margins on your trades are slim before you even take costs into account. This is why it’s important to make sure that you keep your fees as low as possible when trading. If you don’t do this, it can make trading a financial mistake. We’ve put together our best tips to help you to keep trading fees low and to give you the best profit margin possible.
One of the most important aspects for keeping your profit levels high is to ensure you work hard to lower trading fees. If your fees are too high, it will eat into your profits and cause you to potentially make a loss. This can even be the case on trades that you initially think have made a profit. For example, if you make 1% profits but your fees are 1.5%, then there’s a good chance you’ll be walking away having made a significant loss. There’s no point trading at all if this is the case.
That’s why it’s important to check over these tips to bump up your profits.
Trade at the right time
The first thing you need to look into is trading at the right time. Depending on the broker, they might charge higher fees during peak trading times. If you work remotely, this shouldn’t be too difficult for you as you can choose your own times to start trading and carry them out whenever you want. However, if you have an in-person job, then you may have to trade during your breaks if you want to get the best fees.
Of course, the best option would be to avoid brokers that charge different fees based on the time you trade. Unless the off-peak fees are significantly lower than everywhere else, these brokers could end up costing you a lot in the long run. Especially if the best time to sell is during a peak time and the fees are increased. This will remove the benefits of the cheaper, off-peak trading fees.
With so many different brokers on the market at the moment, the choice is yours when it comes to trading. You don’t really have to worry about what’s available, as you can just search until you find one that has the best level of service for you. As most are covered by the FCA, it does mean that you’re able to trust the majority of available brokers, but the costs associated with them will vary.
Before you sign up anywhere, make sure that you carry out the right level of research. Look through all the different reviews that are available, look through the list of fees that the broker advertises and work out which one will offer you the best deal. You may even need to sign up for two different brokers if there are better fees available for different types of trades.
Chop and change
It might work out cheaper to make a small trade at one broker and then cheaper to make a big trade at another broker. As we mentioned at the end of the last point, don’t be afraid to sign up for multiple brokers. As long as there isn’t a charge involved for signing up, it will be worth your time creating an account.
This will allow you to switch between brokers for different trades and, from there, you can keep your costs at a minimum. While it might seem like a small amount at first, if you trade on a regular basis, then it can quickly add up and turn into a significant amount. When it comes to making a profit at the end of the year, every small saving will help towards this.
You might also want to consider using a robo-advisor for smaller trades. This is because they do tend to have lower fees in order to persuade traders to use the service. It will take out your own agency in terms of the trades that you make, but if you choose a successful trader, then it will offer you the potential to still make a profit from your smaller trading activity.