Free Online Trading Sites - 3 Places to Trade Without Fees

Are There Really Ways to Trade
without Commissions or Fees?

Savvy day traders these days have found free online trading sites that offer ways to use small capital investments in a way that does not involve fees or commission. Here we will look at some of these alternative platforms and elaborate on the strengths and weaknesses of each.

Binary Options

The first platform we will look at is the typical binary options site. Normally these fixed high yield / high risk contracts pay out 70%+/- on daily or hourly investments depending on the duration of the investment. The great benefit for users of this type of platform is that it (like the others reviewed here) does not charge any transaction fees or commissions. Whereas one could normally expect to pay anywhere from $3 - $10 typically on a stock trade (plus spread) for each traditional stock or option trade - and invest in increments of $1000+. Contrast that with the binary options broker, who would not charge any fee or commission and would allow investments in increments as small as $10 (to perhaps as large as $3000 per contract). It does not take a lot of analysis to figure that this type of trade is much more efficient for small capital investors.

Barrier Options

Similar to binary options are barrier options. While the binary contract tends to be one sided in nature (up or down), a barrier option site works differently. The contract on these types of free online trading sites involves either a one side, two side, inside, or outside range of values where the contracts fall in the money. A buyer can pick the inside of a range, outside the range, or the top or the bottom of a given range. Algorithms belonging to the barrier options broker will determine the strike prices and yields for each contract. The buyer of the investment pays no fee nor commission nor spread for the privilige of trading. This is very popular as a means of hedging against price swings in long (or short) positions of the underlying securities.

60 Second Options

Yet a third type of high yield, high risk addition to the list of free online trading sites is the 60 second options platforms. These platforms can offer yields similar to the previously mentioned free sites but with a duration lasting just 60 seconds. It is without question the highest turnover rate of capital imaginable short of high frequency trading bots. A 60 second options broker can offer lot sizes as small as $5 to perhaps as large as $2000 depending on the dealer.

Free Course on High Yield Short Term Investing

For more information on trading any of these types of securities, please sign up for a free trading course on binary options. In the course you will learn about each of the above securities in detail and be shown basic strategies and methods for constructing positions, hedges, and using simple statistics and basic probabilities to improve profitability.

Binary Options Hedge vs Trading Barrier Options

Are Barrier Options the Right Choice for You?

Before one considers trading barrier options one should also consider the similar alternative investment, the binary options hedge. Although the investments are very similar in terms of in the money yields offered, the risk characteristics are considerably different. Many times the determining factor in deciding which asset to trade comes down to a choice of convenience versus control.

"The development of binary options trading has been a huge blessing for the world of hedge trading for retail investors," said Steve Wise of binary-option-broker.com. "It affords the retail trader the opportunity to make simple hedges in the marketplace as a means to trade for profit or as insurance against loss. Previously this sort of risk management trading was the realm of institutions and wealth managers."

Convenience vs Control

Wise added that when it comes to picking barrier options or attempting to use the binary options hedge it really came down to a choice of convenience or control. "Does the retail trader want to buy a spread of values outright with barrier options or does the trader want to have more control over when - and whether - an individual binary options contract is left open or hedged. The effort required to do either trade and the range of potential outcomes is considerably different depending on which contract you decide to use."

When a trader picks up a binary options contract with the intent to potential hedge the initial contract with an equal and opposite trade, the resulting combination of assets provides a small range of strike prices with a high yield of sixty to eighty percent and a very wide range of values with a modest loss - "Typically ten percent plus or minus," according to Wise. In theory the draw of opening one contract and then hedging it revolves around having the opportunity to create a window of values with a high yield while all other possibilities preserve most of the capital invested.

Boutique Solution vs Off-the-Shelf

On the other hand in the case of barrier options the retail trader effectively walks up to the counter and picks up whatever spread of values is offered by the barrier options broker. Said Wise, "The range of in the money expiration prices is set by the broker at purchase and the day trader then hopes the contract expires with the spot price somewhere in that money range." Once the contract is purchased, the trader effectively walks away having already bought both the put and calls at the same time. One major difference with the binary options hedge is that the tail risk - the possibility that the contract expires outside the money - results in loss of most or all of the investment. "In theory the tail risk is the price the trader pays for the typically wider spreads and convenience of buying a range of values with no initial open ended exposure," said Wise.

Regardless of whether a trader has an interest in barrier options or binary options it behooves them to take a basic options trading course to learn the ropes according to Wise.