The Hidden Costs Of Commission-Free Trading

The hidden costs of commission-free trading:

jumped on board, with Ameritrade including options as part of the commission-free offer. So what are the implications for investors?This is a good deal for consumers, right? The fact that the stock prices of major brokerages have fallen materially on the news suggests this the market sees this eating into their profits, and perhaps, by extension, helping customers. Of course, something you use being available for free is generally a good thing.

So free trading may save you money on trading costs, but if it causes you to trade rashly, your returns may suffer. For most investors, investment returns are a much bigger deal than trading costs. Therefore, being able to trade for free can be counter-productive if it tempts you to become a day trader and tank your investment performance.

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