If you’re familiar with Chris Gardner’s story - now a blockbuster movie - entitled: ‘The Pursuit of Happiness’, you’ll be familiar with the stock-market’s life changing potential for any man or woman.
A lot has changed since the 1980s, however, especially after the introduction and boom of commission-free stock trading, so this article will break down some myths and truths.
One thing that hasn’t changed, though, is the drive required to succeed in the markets, so let’s kick-start with an inspirational movie-quote:
Christopher Gardner: Hey. Don't ever let somebody tell you... You can't do something. Not even me. All right?
Christopher: All right.
Christopher Gardner: You got a dream... You gotta protect it. People can't do somethin' themselves, they wanna tell you, you can't do it. If you want somethin', go get it. Period.
Myth 1: You need to find a stockbroker near you
Whether you’re living in New York or Florida, it shouldn’t necessarily influence which broker you choose because you will almost never visit the bricks and mortar of the building. These days, people living as far as the United Arab Emirates or Australia can be trading with a broker located in the United States of America or the Bahamas.
You may want to put more weight on a broker’s level of customer service, instead. For example: are they available 24/7? How long are their wait times if you’re required to call?
Myth 2: You can’t trade with an offshore broker
If you’re based outside the US, you may be eligible to trade with TradeZero International, which operates from and is regulated in the Bahamas.
Being regulated outside of the US also enables different offerings that can benefit day-traders, including:
- No Pattern Day Trading rules: Most online brokers that offer US stock market trading limit the amount of trading in an account if that account has less than $25,000.
- Higher Day Trading Leverage: TradeZero provides clients up to 6 to 1 intraday leverage on their equity. 6:1 day trading leverage allows traders to maximize day trading opportunities in the market.
- Overnight positions are granted 2 to 1 leverage. Extended leverage will be provided to all trading accounts based on the following schedule:
Myth 3: You can short with any stock-broker
This is definitely not true. In fact, some brokers don’t allow the function of short-selling at all, whilst others won’t often have inventory/locates to enable you to borrow shares to place a short trade.
As a specialized broker, TradeZero frequently updates its inventory, providing an extensive range of locates for as many stocks as possible, including micro-caps and those with lower floats.
Truth 1: You can trade stocks and crypto in one place.
In the final quarter of 2020 $BTC (Bitcoin) broke out to new highs with conviction, hitting highs of over $60,000 USD per coin.
Crypto is booming with new coins created daily, providing frequent opportunities to trade stocks and coins simultaneously.
One of the more notable coins to follow is Dogecoin, helped along by Elon Musk who has at times mentioned them on his own Twitter handle.
You can join the TradeZero waitlist to trade crypto and stocks from one platform, eliminating the need to hop brokers or platforms.
Truth 2: Trading stocks is commission-free.
Not all brokers are commission free when it comes to trading. You’ll find that some short-selling specialist brokers still charge a fee for commissions.
However, there are some brokers operating based on a commission free model. People in the past have thought that this must be a myth, asking: How can a broker make money without charging commissions?
One method is payment for order flow, also known as (PFOF). Investopedia explains “it’s the compensation and benefit a brokerage firm receives for directing orders to different parties for trade execution”. The brokerage firm receives a small payment, usually fractions of a penny per share, as compensation for directing the order to a particular market maker.
There you have it: three myths busted, and two truths provided. If you’d like to learn more about TradeZero as a potential broker, you can here.
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