O'Reilly logo

Day Trading Stocks the Wall Street Way: A Proprietary Method For Intra-Day and Swing Trading by Josh DiPietro

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Lesson 14

Picking the Right Online Broker

Pay-per-Share versus Pay-per-Trade Brokers

There are pay-per-trade brokers and there are pay-per-share brokers. The main difference boils down to how much is your expense, or the commission you pay, per trade.

If you're a pro day trader, meaning you execute several roundtrip trades each day, then you need to have a low commission structure. I define low as paying between 40 cents and $1.00 per trade when trading in 100-share blocks.

Experience has shown me that most amateur day traders don't use pay-per-share brokers and they don't trade consistently in 100-share blocks. Much of the reason is that the traditional online brokerage industry, which is all about pay-per-trade brokers, maneuvers to retain amateur loyalty.

Here's a big secret that the pay-per-trade brokers don't want beginners to learn of. There are online brokers who charge as little as $.004 cents per share (pay-per-share). That amounts to about 40 cents per trade when trading in 100-share blocks. To the amateur who trades through a pay-per-trade broker and pays $5 to $10 per trade, no matter how many shares are purchased, to hear about that is a shocker—and good news. The few cents you read about above is no misprint.

“What's the catch?” amateurs ask me. “How come I never heard of pay-per-share online brokers?” And then they want to know: “Why only purchase 100 shares per trade?” Those are understandable questions. The answers may be surprising.

First, when you trade ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required