Independent Stock Trading


If you’re familiar with trading and the stock market, then you are well aware that stockbroker fees can absorb a good deal of the profit made from each trade. Fortunately, it’s possible to eliminate the need for a broker altogether. Keep reading to learn more about the options for trading independently, the benefits related to broker-free trading, and how to do it.

How Can I Trade Independently?

Image via Flickr by SimpleFX

Realizing that you can conduct your own trades completely broker-free can be incredibly freeing. When you decide to trade independently, you can use a:

  • Discount Broker: A discount/online broker allows you to manage your own trades through a site or an app. Though this option is considerably cheaper than a full-service stockbroker, you still get access to educational resources and analytics to help guide your trading decisions.
  • Direct Stock Purchase Plan: With a DSPP, you purchase shares directly from companies that allow it. Using this plan, you are in complete control of identifying, purchasing, and managing your investments for a minimal transaction fee.
  • Dividend Reinvestment Plan: A DRIP plan is another option if you already own shares in a company. Through this plan, you register as a participant with the company and purchase shares that are normally unavailable to the public for a small transaction fee.

What Are the Benefits of Trading Independently?

If you’re familiar with trading and the markets, you can enjoy a number of benefits when you trade on your own, such as:

  • You can eliminate the cost of a stockbroker’s commission, allowing you to increase your profits.
  • It allows you to remain aware of developments in the market and with your stocks, giving you the ability to trade more responsively.
  • By trading on your own, you can learn more about the market and develop your trading skills.

How Do I Make Trades on My Own?

In order to start making trades independently and successfully, you should:

  1. Choose the right broker-free plan. The right plan for you really depends on your experience, budget, needs, and goals. Whether you go with a DSPP, DRIP, or an online broker, you’ll be able to earn a profit, the process and investment availability will just be a bit different.
  2. Keep your account in good standing. When you use a DSPP plan, you’ll just need a checking account for your deposits, but a DRIP plan requires a specific type of account from a financial institution. Whichever plan you use, maintaining your account balance will eliminate potential issues when it’s time to pay your monthly deposit.
  3. Research prospective investments. Taking the time to look into a company is always important, but it becomes even more vital when you’re handling all of the decisions with little to no guidance. Check out the company’s growth history, the trends that led to past growth, and what the future looks like in their market and industry.
  4. Purchase stocks. After you’ve vetted your prospects, it’s time to buy some shares. The process differs slightly depending on the investment plan you choose.

To ensure that you make a decision that’s right for you, assess your budget, goals, and the amount of time you’re willing to devote to the endeavor.