What Does It Mean When You Use an Online Stock Trading Company & They Say "Per Trade"?
By Michael Wolfe
Many investors choose to engage in stock trading online. Rather than place orders over the phone, these investors send orders to a broker online. In order to trade with an online brokerage, investors must first open an account. In return for placing these trades, brokerages will demand that the investor pay a fee. While some brokerages charge a flat fee, most brokerages charge a commission assessed for each trade the investor places.
When a person trades stocks online, he sends orders to a broker about which stocks he wishes to buy and sell. An order may consist of a request to buy or sell one kind of stock or multiple kinds of stock. Each time a person instructs a brokerage to perform a certain action, this is considered an order. Orders may be made up of a single trade or multiple trades.
A single trade is considered to be the buying or selling of a single type of stock. When the term "per trade" is used, it refers to a single trade, not a full order. The term can be used in a number of different contexts in online investing. For example, it may be used to refer to a commission charged on a trade or it may be used in the context of financial research.
An order can be made up of multiple trades. For instance, if an investor orders an online brokerage to sell 100 shares of company A and to buy 100 shares of company B, this order would consist of two separate trades. This is because the brokerage will have to execute two different sales transactions to complete the order. If the investor were making a single transaction, it would count as a single trade.
Most online brokerages charge a fee for each trade it executes. Generally, this fee is relatively low to encourage trading and to allow the investor to make a profit. So, for example, if the investor is required to pay a commission of $10 per trade and files in order in which he buys stocks in three companies and sells stock in a fourth, he would pay $40 in commissions for that order.
Michael Wolfe has been writing and editing since 2005, with a background including both business and creative writing. He has worked as a reporter for a community newspaper in New York City and a federal policy newsletter in Washington, D.C. Wolfe holds a B.A. in art history and is a resident of Brooklyn, N.Y.