Do You Pay a Stock Trade Fee to Buy & Sell?

Trading Stocks

The short answer is yes, you do pay a fee to buy and sell stocks. It is called a commission. Individuals and corporations generally are not able to trade stocks directly--they must use a brokerage firm. Firms take commissions either as a flat fee per trade or as a percentage of the monetary value of the trade, or both.

Commissions

Commissions differ in amount and type depending on the firm. A personal stock broker, who consults with you, advises you and develops investment strategies, is generally more expensive than placing the order yourself through an online service.

Cost

Traditional, personal stock brokers at large brokerage firms may charge fees of $50 to $100 per trade or take a commission of several percent. Some of these firms offer online trading at rates of around $20 per trade. Online trading companies generally do not charge more than $10 per trade, and when they do take percentage commissions, they are much less than those of traditional brokers.

Cost-Effective Tip

When dealing with flat-fee commissions, it is most cost effective to make only large monetary value trades. For example, a flat commission of $50 is 10 percent of a $500 purchase of stock, but it is only 1 percent of a $5,000 purchase of stock.