Stochastic, MACD, Bollinger Bands Plus Day And Swing Traders

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Types Of Trading Accounts

A trading account is a trading tool that one will use to place buy, sell, limit and stop orders in the financial markets.  Traders and investors who have the most appropriate trading or investment accounts will have a good start like a sprinter.

This article is for market participants who want a clear understanding of the different types of trading and investing accounts ( Types of Brokerage Accounts Traders Should Know) that suit them.
Let's get started.

Purest Trading Account

The purest trading account regroups all accounts that allow one to place instant market orders that are executed without delays or lateness. 

One places orders as a swing and day trader, and orders are filled on the spot.  The purest trading account is for active day, swing and position traders.  It requires that the market is open at the time of the orders.
Mainly, the purest trading account is for short term traders, investors and speculators.

Investment Account

An investment Account is for medium and long term market players. 

A smart investor often uses limit orders to buy and sell.  For example, an investor may place an order to buy GE stock at $12 though the price is currently at $13 or below $12.  The order can be delayed or executed instantly depending on the brokerage firm.  


Usually, most investment account orders are delayed.  One can place those orders before or after the markets open and during live markets opening hours.

The smart medium and long term investors always buy or sell at a specific price.  Therefore, they are patient and do not worry about the short term fluctuations.  

Also, when they want to close a position, that order can be delayed.  For example if one buys HP stock at $22, and it rose to $30.  Now the market is open, and one wants to sell it profitably, still the order can be delayed except if the broker has the facilities to sell it right away at the current market price $30. It means sometimes that one may not be able to sell it right away at $30 or end up selling it at a lower price.

Please note that some brokers do have the facilities to sell instantly like with the purest trading accounts.

Multi-function Investment Account

Those accounts allow one to have both the functions of a purest trading and investing accounts.  It means one can trade (day and swing trade) and invest.  When one is trading, one will select the trading option, but one will only use the investing option for the investment buy and sell orders.

Please, stay focused, and be sure to use the correct option for the appropriate dealing. 

One example today (in 2020) is the trading 212 account that allows one to trade, invest and use the ISA investment account.

Commissions Free Accounts

The good news is that there are commissions free trading and investing accounts.  However, only few market players do take advantage of those opportunities. 

It is also shocking that ordinary traders and investors are quite happy to fork out those commissions instead of just Google searching for the terms: free commissions brokers.  I do not understand why.  

The Commissions are inevitable in most cases, but one should not ignore the commissions free brokers.  Please do me a favour, and use a commission free account.

Tax Free Investment Account

If one makes $1000 profit, one can end up paying $200 (20% minimum rate) up to $400 (40% higher tax rate). 

So instead of banking all $1000 profit, one has taken a big hit without taking advantage of the tax free investment accounts that are available in your country of residence.  Indeed, it is highly recommendable that all investors use those tax free accounts especially if one is a small investor.

Tax And Commission Free Accounts

There are accounts that offer tax and commission free advantages.  For example a commission free broker that also provides ISA investment account in the UK
allows one to invest tax and commission free for all ISA account dealings.  Please check if there are brokers in your place that offer those opportunities.

Conclusion

Traders and investors ought to use the most appropriate trading and investment accounts that help to save substantial amount of money on taxes and commissions.

Obviously, those who use the wrong accounts will leave so much money on the table without even feeling it.  With a bit of search on the major search engines, one can compile a list of the most suitable trading and investing accounts that can help one to reduce the cost. 

The time has come that both ordinary and sophisticated investors use the right accounts that cut commissions and taxes.

Hopefully, this educational article will help traders and investors begin to do something about the growing commissions and taxes that erode healthy profit. 
If that is the case for you, then feel free to share and bookmark it.  Please remember also to say few good words about us in various trading and investment forums.
I will really appreciate that. I wish you the very best.  Happy Investment to all. 

This article is written by G Beaulieu,
founder of stochastic-macd.com.