If your type of trading involves calling a broker to execute a trade or monthly reviews of your mutual fund portfolio, the tools available for direct access trading in Canada are clearly overkill.However, if you’re the type of trader who makes several trades a day then you’ll benefit from some of these tools providing direct access trading Canada.
With these types of trading tools your trade doesn’t linger long in your account, nor does it make several stops before hitting the trading floor. Instead the trade is virtually instantly executed. Needless to say, direct access trading in Canada is not for the novice trader. Typos are not allowed as excuses for selling your stock way to low.
These types of trades are often carry a lower commission fee, more detailed stock quotes and a more elaborate trading interface than other online trading tools.The tools are more sophisticated appealing to the professional trader. While the term “day trader” may come to mind, and the tool is popular with this community, there are other types of traders that fall outside of the day trader definition. They benefit from this type of tool for direct access trading in Canada.
Most firms provide access to both the U.S. and Canadian equity and options markets. Speed is the major attraction and orders are typically filled in half a second as compared to traditional tools taking as long as a minute to clear. Commissions typically are lower too, as much 65 percent less than fees charged by traditional online brokers. An example is a brokerage charging $7 – 9 to trade 1,000 shares of a U.S stock. Online brokers would charge $20-$30 to execute the same trade.
While the commissions may be lower there is always a cost to every service. If you receive faster trades using a tool for direct access trading in Canada, then you are going to pay for the advanced service somehow.Some direct access brokers require you enroll in a monthly newsletter, or data feed that costs hundreds of dollars each month. Part of this fee may be waived if you actively trade. Other brokers apply fees if you don’t execute a minimum number of trades each month. Many require a hefty deposit to open an account for direct access trading in Canada.
For active investor, the direct access market arena can take you to the next level of superfast trading. It will cost you, but in the long run, it is a viable platform for the hyperactive trader.