Started with Robinhood and now the big brokerage firms such as Charles Schwab, TD Ameritrade, and E-Trade now have all announced commission-free trading and it makes me happy to be able to not have the pay the $6.95 commission-free from buying stock.
Commissions are the reason people take on too large a position to help offset the high cost of trading. There are thousands of stocks to invest in, why buy so many shares of one company. It’s because of trading costs. Now, an investor can buy one share of a stock and have it go up only a few cents and they make a profit. Before, this could never be done because of the commission fees. For example, if someone traded a single $100 share of stock, it would have to gain 10% just to cover the commission, without anything else to consider. Banks are paying less than 1% yearly interest on your deposit. Even with high yield savings account the APY has been decreasing to now an average of 1.90% from a previous 2.10% APY rate. Commission fees are now dead.
What is your view on Commission-Free Trading?