Trading Commissions: how to avoid them

Published: December 15, 2020 by Andrew

Paying Online Trading Commissions is not a good idea, especially for those who start trading and have very little capital available. In this article we will show why it is not convenient to pay Trading Commissions and which are the best platforms that allow you to operate even without fees.

Best Broker Platforms without Trading Commissions

Let’s start our guide by going straight to the point, with the list of the best online trading platforms that do not charge commissions and have no costs.

We have carefully selected the trading platforms without commissions and obviously we have not placed our attention only on the absence of costs for the trader. All the selected platforms, in fact, are safe and very simple to use even for a beginner at the first experience.

Platform: etoro
Min. Deposit: 50€
License: Cysec
  • Social Trading (Copy the best)
  • Simple and intuitive
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: xtb
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Whatsapp Group
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: iqoption
    Min. Deposit: 10€
    License: Cysec
  • Free demo without limitations
  • Minimum deposit low
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: ubrokers
    Min. Deposit: 250€
    License: Cysec
  • Free Training
  • Zero Commissions
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: trade
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Free course trading
  • ➥ Start
    1star 1star 1star 1star 1star
    72.30% of retail CFD accounts lose money
    Platform: forextb
    Min. Deposit: 250€
    License: Cysec
  • Free trading course
  • Free trading signals
  • ➥ Start
    1star 1star 1star 1star 1star

    eToro

    eToro is the preferred trading platform for most beginners. What is special about eToro? In addition to being reliable, without trading commissions and very simple to use, it is the only platform that allows you to copy, in a completely automatic way, the operations of other traders.

    Many beginners therefore use the platform to search, thanks to eToro’s patented software, for traders who in the past have earned the most with the least risk.

    By copying these traders (it is all automatic, it is the software that replicates the operations in real time) they immediately obtain a double advantage: they trade with the same results as the best traders in the world and they learn online trading just by observing what these great traders do.

    You can sign up for free on eToro by clicking here

    ForexTB

    ForexTB is a great option for all those who decide to start trading online and don’t want to make mistakes. With ForexTB it is possible to trade without paying online trading fees or fixed costs.

    The ForexTB platform is particularly easy and intuitive. Among other things, all members receive free phone assistance from a true trading expert who offers advice and guidance.

    Anyone who wants can immediately download an excellent ebook for free that explains in detail and in simple words, how you make money with online trading.

    This ebook has been a resounding success precisely because it is totally free (other trading courses have exorbitant costs) and it really works, that is, those who study it with a minimum of attention can obtain excellent results. You can download the ebook for free by clicking here.

    ForexTB also offers an unlimited and unconstrained demo, as well as accessible without paying trading fees. Thanks to this demo it is possible to experiment without risk.

    You can sign up for free on ForexTB by clicking here

    Iq Option

    Iq Option is an extremely simple and intuitive online trading platform. Among the main advantages of this platform is the possibility of starting trading online with an initial capital of just 10 euros. There is no other trading platform that requires such a low investment. The other platforms, however, usually require a variable investment between 100 and 250 euros.

    Obviously Iq Option does not charge online trading fees and has no fixed costs. Everything is completely free: the ability to trade, access to an educational area with hundreds of high-quality video courses, the ability to use a very useful demo with no restrictions and no limits.

    You can sign up for free on Iq Option by clicking here

    Calculation of online trading commissions

    How are online trading fees calculated? In fact, there are three basic models. The first, the one we like, is also the simplest: zero commissions.

    This is the model applied by those platforms that do not apply online trading commissions but only a spread, that is, a tiny difference between the price at which you buy and what you sell. The advantages of the spread are many, but we can summarize them by saying that they are extremely more convenient for the trader (unless you have a millionaire capital).

    The second model is that of fixed commissions and is applied by some of the most famous trading platforms (in other words, it is the model applied by the platforms that advertise themselves the most).

    For example, Fineco charges a fixed online trading fee of 7 euros on each trade. This commission can go down in the case of large volumes (that’s why if you have a few million euros to invest with trading it’s all cheaper). Some trading platforms also have a cap on monthly commissions, usually € 5,000.

    This means that if you make more than 714 trades in a month (5000 divided by 7), you no longer pay commissions on subsequent trades. Once again, for the big millionaire traders, paying commissions can also be acceptable (they have discounts) but for those who make few operations and especially with very small capital, not.

    Another type of calculation for trading fees is a percentage type. In practice, a percentage of the amount is paid on each transaction, it does not matter if the transaction ends with a loss or a profit.

    The most popular type of trading fee is the fixed one. However, there are some completely free platforms (zero commissions) that are the ones that should be used.

    Why you should not pay trading commissions

    Let’s now focus our attention on an important truth: paying trading fees is a tragic mistake.

    Suppose we want to start trading online. Beginners usually prefer to start with very small amounts and then eventually increase as they gain more experience (and they do great because this greatly reduces the trading risk).

    A beginner who wants to play it safe could start with 10 euros, for example with Iq Option. Fortunately, Iq Option does not charge any commission (we recommend it for this). But what if he applied them?

    If he applied 7 euros of commissions per operation, the capital of the 10 euros would burn in 2 operations. Even if you start with a capital of € 250, if you pay a commission of € 7 per transaction, the capital ends up in just over 30 operations. Obviously assuming that they all end in positive, which is quite unlikely for a beginner.

    This clearly explains that paying trading fees is not a good idea, especially for those who want to trade online with small amounts (and we reiterate that it is a winning choice for beginners).

    Among other things, platforms that do not apply commissions have less money to advertise and therefore always try to offer the best possible service to attract new customers by word of mouth: for example, they can offer a free forex course or a trading signal service.

    It is widely believed among more experienced traders that commission-free trading platforms are better from all points of view than those that apply commissions.

    Directa Trading Commissions

    Directa offers modern and functional trading platform but is still a “classic” Broker and therefore not exempt from fixed commissions.

    We try to outline Directa’s commissions by providing all the possible costs and scenarios depending on the chosen profile, which can be:

    • PROPORTIONAL: The commission is a percentage that varies (from 0.13 to 0.19%) depending on the value traded
    • FIXED: As the name implies, it provides a fixed commission, which does not change, regardless of the negotiation. This commission is, for example, around 9 euros for each transaction with American shares.
    • DIGRESSIVE: Only useful for those who make intraday transactions, since it provides for a commission cost that decreases with the increase of the transactions made and is therefore “convenient” for those who make many transactions every day.

    Directa does not foresee additional costs of keeping securities and maintaining the account but inconvenient when compared to brokers without trading fees.

    The fact that it is a “traditional” bank allows you to open an account either through a subsidized branch or online, which is certainly more convenient and quick.

    One of the limitations we have noticed on Directa is the constraint to owning a portfolio only in euros and not in other currencies, which for some investors can be uncomfortable.

    In fact, for transactions in foreign currency the system will make an automatic conversion, based on the exchange rate available at the time of the request.

    The commissions are high when compared to a broker without commissions but these costs have little effect if you make large investments and use the fixed cost profile.

    For example, if you buy 100,000 euros of Apple shares, I doubt that the 9 euros of the operation will worry you. While if your investments are small, in the order of hundreds of euros, then 9 euros can affect the profit of the operation and an online broker without commissions is the ideal choice.

    Best trading bank

    We have done a very in-depth talk about trading fees. Now we know why it is not worth paying commissions in any way.

    Now we can finally answer a question that our readers often ask us. What is the best bank for trading online? The answer is that it is better not to trade online with the platform offered by a bank (especially if the bank is European) because they always apply quite high commissions and therefore make trading very not convenient.

    Much better to use the non-bank brokers (CFDs) that we have presented in this guide. After all that European banks are anything but reliable and affordable by now everyone knows …

    trading commissions

    Conclusions

    Online trading commissions are a heavy cost for traders, especially for beginners and for those who, however, only have a small amount of capital to invest. For this reason it is always advisable to operate with trading platforms that do not charge fees.

    Among other things, it has been shown that these platforms in addition to being more convenient, also offer a better service: not having large budgets for advertising, they try to make the trader happy in order to acquire new customers by word of mouth.

    Below, the complete list of the best online trading platforms:

    Platform: etoro
    Min. Deposit: 50€
    License: Cysec
  • Social Trading (Copy the best)
  • Simple and intuitive
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: xtb
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Whatsapp Group
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: iqoption
    Min. Deposit: 10€
    License: Cysec
  • Free demo without limitations
  • Minimum deposit low
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: ubrokers
    Min. Deposit: 250€
    License: Cysec
  • Free Training
  • Zero Commissions
  • ➥ Start
    1star 1star 1star 1star 1star
    Platform: trade
    Min. Deposit: 100€
    License: Cysec
  • Free demo
  • Free course trading
  • ➥ Start
    1star 1star 1star 1star 1star
    72.30% of retail CFD accounts lose money
    Platform: forextb
    Min. Deposit: 250€
    License: Cysec
  • Free trading course
  • Free trading signals
  • ➥ Start
    1star 1star 1star 1star 1star
    Is it possible to trade without commissions?

    Yes, just choose brokers that operate with free CFDs and there will be no fixed commission to pay.

    What are the commissions applied in trading?

    Usually the most common are entry fees, stamp duty on securities deposits, management and execution fees. However, when operating with CFD Platforms all these items are cleared.

    What do zero commission brokers earn from?

    Brokers like eToro earn only from the Spread, or the differential between the Bid price and the Ask price. A miniscule value compared to the fixed fees charged by bankers.

    Why isn’t it convenient to pay trading fees if you spend small amounts?

    Because you risk burning the capital only with commissions. Example: you start trading with 250 euros and pay 7 euros in commissions. In just over 30 operations, the capital vanished.

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