Posted on Leave a comment

Stock Trading Lessons from the Hunger Games

Every so often something comes along that turns into a phenomenon which then takes on a life of its own.  This weekend is the big launch of the first movie in the widely anticipated  Hunger Games series.  The mania for the film is already at an all-time high going into the opening weekend – everyone is talking about it on the entertainment and business news channels, movie theater tickets for shows already sold out in some major centers – yes, people sense that this is going to be something huge.  Some are already comparing it to Harry Potter or Twilight.  While most people enjoy the stories, seasoned traders and investors understand something of this magnitude spells profits.

Investors and traders alike have seen this story play out every day in the markets.  When things get emotional, there’s really no telling what people will do and more importantly what people will pay. Great traders are serial opportunists – always looking for an advantage, and therefore how to profit from a situation.  For that reason, the fervor and enthusiasm for the movie has manifested itself as an emotional move higher in the stock of the company that owns the rights to movie, a company called Lions Gate Entertainment.

The simple lesson in this chart is that when people want something, they will pay for it. Prices in a stock chart go up because people believe that the value of a company will go up over time.  When lots of people start thinking the same thing, prices move very quickly, and that’s when things get emotional.  The fear of missing out, otherwise known as greed, is a powerful force that seasoned traders know how to recognize and exploit.

In the stock market, as in the Hunger Games, there is a simple rule for investors and traders, stay alive. To do that, you have to be calculated and cunning and ultimately you have to be willing to take money from those who are more than happy to hand it to you.

Posted on Leave a comment

How to choose an online discount brokerage – part 6 – beyond commission prices

By now you’ve probably learned more about the wonderful world of commission pricing than you’d ever really wanted to know.  As you’ve perhaps figured out, choosing a discount brokerage can be a bit of a chore, but it can be made much easier by understanding what your trading needs are before you go shopping.  Understanding how much you have to trade with, how often you expect to trade, what types of order sizes you expect to make and what price of stocks/ETFs you want to buy will go a long way in making the decision of which broker fits your needs a lot easier.   There is, however, more to choosing a broker than just commission pricing. Other than commission pricing, some of the other important factors that go into choosing a discount brokerage can be clustered into the following 3 categories:

  1. Platforms & Trade Execution
  2. Account Management & Customer Service
  3. Research Tools & Education

Your experience level and investing/trading needs are generally a good way to establish which additional features you will need to pay attention to most when selecting a discount brokerage firm.  For example, an experienced investor will likely have a sense of how often they place orders, what types of orders they make and the sizes of those transactions.

On the other hand, for those who are just starting out, it is much harder to understand what their needs and requirements will be.  It is difficult for those who are new to the market to know what the right questions to ask are and even to know how to make heads or tails of the different products and services that are offered as part of opening a brokerage account.

In our continuing series on how to choose an online discount brokerage company, we will be looking into each of these additional categories to help beginners and experienced investors/traders alike make sense of their options.

Read the previous article in this series.

Posted on Leave a comment

How to choose an online discount broker – Part 5 – Commission Pricing II

Why is commission pricing so complicated? Why is it so hard to get good information? Those are some of the questions that inspired us to create the most user-friendly brokerage comparison and review section in Canada.  To be able to compare apples to apples, we had to reverse engineer the marketing and sales pitches, to get down to what trading commissions cost with online discount brokerages.

In an ideal world, consumers would be able to get the lowest rate at a flat fee, no strings attached.  While it is difficult to “feel sorry” for a bank or financial institution, providing access to markets and data as well as coordinating transactions is pretty complicated and expensive, which means that like any other business, they have to be able to pay their bills. Translation: companies that charge low commissions may not be able to afford the full suite of services and features that other discount brokerages do.

To fixed-fee or not to fixed-fee?

Flat fee pricing – one number for all your trades, certainly makes the math easier to figure out when keeping track of your costs.  Whether or not it is the “best” or lowest flat fee is a different question altogether.  “Flat fee” is also different from “fixed fee”.

A truly “flat fee” is just that – a flat price that includes all of the little extra fees that come along with executing a trade. A “fixed fee” for commissions is a fixed commission price you pay per trade, but does not include the “extra” exchange or middle men fees. Because there are a slew of “middle men” that help connect buyers and sellers of a stock, each one of those middle men takes a fee.  Usually the most common types of added fees are electronic communication network (ECN) fees and the Securities Exchange Commission (SEC) fees (for US bought stocks).  These fees are usually charged as fractions of a cent on the number of shares traded (e.g. $0.0035/share for TSX) and prices vary from ECN to ECN. These ECN fees usually show up when placing market orders rather than limit orders.

If this all seems confusing, what you really need to know is whether your “flat fee” is truly flat or if you still have to pay any additional fees per trade.  If you’re choosing an online discount broker, this is one question you’ll want to be sure to ask.

What’s the catch?

Currently, only a handful of Canadian discount brokerages offer truly “flat fee” pricing. Most offer the “fixed fee” model. To qualify for either, though, one usually has to make a certain minimum number of trades in a given amount of time or pay some fee for a data package.

For those discount brokerages that have a threshold to qualify for truly flat fees,  the current range of trading activity goes from a minimum of 10 trades per quarter (Credential Direct) to 150 (TD Waterhouse).  One of the only discount brokerages that offers flat commission pricing independent of activity level is Virtual Brokers however they have a required monthly data charge that you need to pay for so there is a bit of a string attached there.

One of the biggest benefits of fixed-fee pricing is that you not only know your minimum cost, but you also know your maximum commission cost per trade.  Hybrid or variable pricing, however, can get very expensive because there is no “maximum” price you pay per trade.  What you pay is determined by the size or dollar value (or both) of your transaction.

What if I don’t trade very much?

If you’re not an active trader, and our research shows that most investors typically don’t trade all that often in a year, the reality is that you will be paying a standard rate.  Standard commission rates range anywhere from $6.49 to $29, with most bigger online discount brokerages falling closer to the $29 end of the price spectrum.  The exceptions to this are companies that have a fairly tight range of what you can be charged, such as Questrade, which charges you between $4.95 and $9.95, depending on the size of your order, not how often you trade.

Is there a down side to fixed-fee pricing?

Sometimes your trade volumes or activities are not particularly high.  If trading a few hundred shares with a handful of transactions a year sounds like you, then variable-fee commissions are not necessarily a bad option.  Take Questrade again, with their volume-based pricing you can pay as little as $4.95 (+ECN fees) to be trading 500 shares at any one time.  Similarly, Virtual Brokers’ “99” plan can cost you as little as $0.99 for a 100 share trade.  From a cost perspective, having to pay $0.99 instead of $29 is a substantial savings if you are not trading often enough in a year to qualify for fixed-fee discounted pricing.

The Bottom Line

In the current Canadian discount brokerage market, there is a lot of competition that is driving commission prices lower.  One of the best things you can do to make sense of all the choices is to ask yourself “how often do I trade?”.  Once you know that answer, it will be easier to see if going with a broker that offers you “fixed-fee” pricing or “variable-fee” pricing will be the most economical for you.  Keep in mind that in order to offer those rock-bottom prices, some other elements of the discount brokerage, such as customer service, accessibility or support resources may not be what they are at other more expensive discount brokerages.

Read the previous article in this series.

Read the next article in this series.


Posted on Leave a comment

Silver Circle: The Movie

Silver Circle

What would you do if you had a printing press that spat out as much money as you wanted at any time you asked for it? It’s a question most people can only dream of being able to answer, but for a handful of individuals in governments around the world, these machines already exist and are used in just that fashion to create currency.

For some, the idea that paper money (fiat currency) should be a store of value (i.e. that a dollar today should buy you the same amount of the same stuff 10 years from now as it does today) is only as good as the paper it is printed on.  In reality, wages have moved at one rate and prices for things at another. While it is generally accepted that prices for things can and do change, what most people hope for is that their savings will be able to work as hard for them in the future as they do today.   But what would a future look like if money didn’t end up storing the value it was supposed to? How would people and economies figure out what something is worth and how would they go about paying one another for goods and services? What if the monetary regulators became overzealous, corrupt and tyrannical? While it might not seem like the plot of your typical action-thriller, it is certainly the backdrop of the soon to be released animated feature-length film “Silver Circle” by Lineplot Productions.

Grey Skies Ahead

The film itself is set in 2019 America, a country where the economy is in turmoil, inflation is out of control and where the monetary regulator, the US Federal Reserve, has replaced the paper money system with silver coins. In the process of trying to gain control over the economy and society, the US Federal Reserve has outlawed buying and selling of non-government issued silver coins and has also set up the Federal Reserve Department of Housing Stability to control the supply, and therefore price, of housing.  A group of rebels, however, is determined to put a stop to the tyranny by putting out their own silver coins and therefore shift the balance of power away from the Federal Reserve and into the hands of the people.

Inspired by the financial meltdown and collapse of Lehman Brothers in 2008, the film’s creator, Pasha Roberts, conceived of the idea of a story about the dangers of financiers gone wild.  We had a chance to speak to Megan Duffield of Silver Circle about the film.  According to Megan, even though the film has an “educational spine” to it and will inform audiences about fiat currencies, precious metals and the US Federal Reserve, this film is an action-thriller first and foremost.   Several of the film’s key plot lines are inspired by historical events, such as Executive Order 6102 which forced everyone in the US who had more than a small amount of gold to turn it over to the US Federal Reserve (you can read more about that here:

Also, silver was chosen for the currency of the future because historically silver actually did serve as currency for many cultures and civilizations and because the prices of silver make it a little easier to relate to for most people than gold’s price.

The Silver Lining

What the film’s creators hope to do is to get audiences thinking or rethinking the idea that your money as cash is as safe as you think it is.  At the very least there is some merit to the idea that paper money (fiat currency) is vulnerable to manipulation and misuse, and that the path such misuse puts society in is not that far-fetched given what is happening to central banks around the world today.  Even though financial advisors and pundits often say past-performance doesn’t guarantee future performance, there’s also no guarantee that what’s happening now won’t play out exactly the same way.

To find out more about the movie including when it will be released, and conferences where you can speak to the creators, you can visit the website at .  You can also find out more about the project and about their opinions on monetary situation in the US at  If you’d like to see another interesting series of videos on understanding social security by The Silver Circle’s creator, Pasha Roberts, you can watch his “Saving Sonny” series here: .

Posted on Leave a comment

How to Choose an Online Discount Broker – Part 4 – Commission Pricing I

One of the first places that retail investors look to when thinking about choosing a discount brokerage firm is commission pricing. Pricing, however, isn’t as straight forward as the lowest price commission per trade.  When thinking about pricing, value is really what you as a potential or existing client are seeking.  After all, if you need or want timely service, fast order execution time, a great trading platform or educational resources, all of those components change what you would be willing to pay.   With all of the options in a very crowded discount brokerage market, how can you meaningfully compare apples to apples?

Even though there are many different parts to consider when choosing the best online discount broker for you, this series of articles focuses on understanding commission pricing as that is one of the major marketing messages sent to consumers.

One helpful way is to understand that being a brokerage firm is a business, and like any other business, brokerages are in it to make money.  Their “business” is providing access to the stock market – they facilitate investors/traders being able to exchange financial products in a market.  As such , discount brokerages make their money on trading activity, and do so in one of the following three ways:

  1. a fee per order (regardless of the number shares traded per order) or a
  2. fee per volume of shares traded, or a
  3. hybrid of fee per order and fee per volume

The fee that you get charged per order or per volume can also depend on the price of the stock – i.e. is the price above or below a certain level.  Currently that ‘threshold’ is a stock price of between $1-$2, depending on the discount broker.  So, to summarize, the way in which commission price is determined can be: the number of orders you make, the size of the orders (in shares) you make and/or the price of the stock you are buying/selling.

Therefore when thinking of pricing it makes sense to really understand your trading/investing style and level.  To make matters tricky, there is no set “definition” of an “active” trader. Each discount broker has a different threshold of what constitutes active or not.  The current range to qualify for “active” trader status (and therefore discounted pricing) goes from a minimum of 9 trades per quarter (OptionsXpress) to 150 (iTrade, TD Waterhouse, Qtrade, RBC Direct Investing).   If it sounds a bit complicated, it can be. Luckily our broker comparison table helps to compare discount brokerages a snap because we’ve put all of those pieces side by side.

In the next section on pricing, we will take a closer look at the commission pricing options of “flat-fee” pricing, standard pricing and “range pricing”.  We’ll also share some tips on ways to get the best commission pricing.

Read the previous article in this series.

Read the next article in this series.

Posted on Leave a comment

How to Choose an Online Discount Broker – Part 3 – Account Types

Many discount brokerages offer different account types, but among the most recognizable are registered retirement savings plans accounts (RRSPs), registered educations savings plans (RESPs) and recently, the tax-free savings accounts (TFSAs).  Discount brokerages also offer what are often known as “non-registered” accounts (as opposed to the registered accounts listed above) which usually consist of either “cash” or “margin” accounts.

Will you be paying by cash or credit?

A “cash” account is one in which a client can only purchase or sell securities if they have that dollar amount available in their account.  Most if not all registered accounts are considered “cash accounts” meaning you can only purchase as much of a security as you have money to purchase with.  Registered accounts also have more restrictions on what kinds of products you can have inside of them as well as on what types of trades you are allowed to place.  For example, most discount brokerages will not let you short sell a stock (or write options) inside of a registered account.

“Margin” accounts, on the other hand, allow clients to borrow money from their discount broker in order to trade securities.  One convenient way to think of the difference between cash and margin accounts is that “cash” accounts are like your regular bank account – you can only spend what you have available in that account, whereas “margin” accounts are like having a line of credit or overdraft, where you can buy securities with borrowed money but in exchange for borrowing  the money you have to pay interest to your broker until the amount borrowed is paid back.

Using margin is a form of “leverage” – a term that many people are more familiar with because of the recent financial crisis.  The term itself implies that you can, just like a physical lever, amplify the force of your trading dollar. So, for example, for every $1 dollar you actually have, you can borrow anywhere from $3 to $50 depending on what the brokerage is willing to lend. With a margin account, it is possible to get into a situation where you owe the broker more than the cash you have on hand (just like overspending on your credit card), so for that reason margin accounts are to be treated with caution and are usually for more experienced investors.

Do you know what you’re looking for?

When trying to choose a discount broker, one of the first things you’ll want to do is determine what account type you are interested in opening – a registered account or a non-registered account or both.  Not all discount brokerages in Canada offer registered accounts, so you can narrow down your search by excluding certain brokerages from consideration.  We have actually helped identify which discount brokers do and don’t have registered accounts on our discount brokerage comparison page here.

If you are looking for an account to invest with outside of your TFSAs or RRSPs, you can look into either a cash account or margin account. If you are looking to do the most basic of investing/trading – just plain old buying and selling, a cash account is adequate.  On the other hand, if you are looking to short sell stocks or use options trading, you will likely need to have a margin account (if you don’t know what short selling is, you can learn a bit about it here).  Some discount brokerages only offer margin accounts outside of their registered plans so be aware that if you are being offered a margin account, you should keep track of how much you are purchasing. Similar to the overdraft, just because you are offered the margin, does not mean you are obliged to use it, but you should definitely use it wisely.

Read the previous article in this series.

Read the next article in this series.

Posted on Leave a comment

How to Choose an Online Discount Broker – Part 2 – What is a Discount Brokerage?

Where’s the Beef?

One of the easiest ways to think about shopping for an “account” is by thinking of going to the grocery store.  If you were to walk into the grocery store and ask a clerk for “groceries” they would say something like: “well you’re in the right store, but can you be more specific?”

When trying to open an investment account with a financial institution, you may be met with the same response if you tell them “I would like to open an account”.  They’ll promptly ask you to please be more specific.  Just like the grocery store, discount brokerages have different types of accounts, and knowing the difference between “registered” and “non-registered”, “cash” or “margin” is as important as knowing the difference between produce and poultry.

So, let’s get to know this “store” called the discount brokerage by first explaining what it is and why you would even go there.

Oh, That’s What it Does…

A discount brokerage firm is a financial institution that enables individuals to purchase and sell (trade) various securities such as stocks, bonds, mutual funds, exchange traded funds (ETFs), options, currencies and/or precious metals like gold and silver.

If you wanted to directly purchase and sell (trade) securities without going through a stock broker or via another intermediary, you will likely have to pick a discount brokerage firm in order to do that.  In contrast, “full service brokerages” have advisors and brokers that do all the “trading” for you.  Sometimes “discount” brokerages are called “direct” brokerages because the person doing the buying and selling is the client and not a broker, whereas a full service brokerage firm has individuals employed to make trades on behalf of clients. Discount brokerages attract everyone from the highly active day trader to the very passive long term investor as clients.

The one common thread amongst all their clients is that the clients place the orders to buy and sell themselves.  Even though the system is equipped to handle direct order placement (i.e. clients can place their own trades usually from their own computers) most discount brokerages offer “broker assisted” trades where you can call a broker at their firm to help execute the trade – for those times when you want to feel all “wall street” and yell buy or sell into your phone from the golf course or yacht.  Save for one firm in Canada, all the others will charge substantially more for broker assisted trades so beware you budding tycoons.

Look Before You Leap

In our next article we will take a look inside the “store” of a direct brokerage firm to see what products they offer.  For now it is important to highlight that even though it is fairly easy for most people to place their own trades, not everyone is cut out for doing so.  Despite the substantial savings in price, sometimes the fear of going it alone outweighs the “savings” of a few dollars.  There are all different personality types when it comes to managing money and investments. Some people dive right in a little too enthusiastically and others would rather watch safely from the shores instead of handling any “investment”.  Before deciding to jump into the financial pool, it’s a good idea to decide how committed you are to learning to swim, especially knowing there are sharks in the water.

Read the previous article in this series.

Read the next article in this series.

Posted on Leave a comment

Discount Broker Deals & Promotions – As of March 1st 2012

Here are the latest discount broker deals and promotions offered by Canada’s online discount brokerages.  While we strive for accuracy in our reporting we cannot guarantee that the information presented below will not have changed or be altered without notice. Please ensure to check the brokerage’s website directly for full details.

Company Brief Description Details Link Deadline
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc none none
Move your brokerage account to Questrade and they’ll cover the transfer-out fee. Transfer Fee Promo none
Maximize your returns. Get up to 1% (or more) of your mutual fund value rebated back to you. Mutual Fund Rebate Promo none
Transfer your account to Qtrade Investor before March 31, 2012 and they will pay you up to $125 to cover your transfer fees*. New Account Promo Mar. 31, 2012
Open a new account with $25,000 before March 31, 2012 and receive 150 trades free. (Applies to the first 150 trades placed within 60 days of account opening at a maximum of $6.49 per trade with a total maximum value of $973) New Account Promo Mar. 31, 2012
Virtual Brokers will cover transfer fees from your transferring institution to a maximum of $150 per account. This offer is only applicable to accounts opened with at least $25,000 in equity before March 31, 2012. Transfer Fee Promo Mar. 31, 2012
Transfer a value of $50,000 or more in assets to Disnat Direct (from a non Desjardins account) and receive a $500 credit (valid for 3 months) which can be applied to regular commissions or account transfer fees $500 Credit May 1st, 2012
Transfer a value of $50,000 or more to your Disnat account (from a non Desjardins account) and receive $300 and free access to their GPS portfolio management tool for a year. Money will be deposited to your account within 30 days of your completed transfer. They will reimburse any transfer fees charged by the transferring firm (up to $150 per account). GPS Promo Limited Time Offer
For new clients: Transfer a value of $100 000 to National Bank Direct Brokerage and reference code: NBDB25 on signup form (section 13). For existing clients: call customer service to let them know you want the deal. The Deal: Get 250 trades for $0.25 each Lots of fine print to read for this deal – click on the link to find out details 25 years. 25 cents deal April 30, 2012
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees Transfer Fee Rebate none
Posted on Leave a comment

How to Choose an Online Discount Broker – Part 1

If or when you decide that you would like to manage a portion of your investments directly, knowing where to begin or even what your options are can feel like a daunting task.  Like belly button fuzz, choosing an online discount broker is not something many people generally think about unless they have to deal with it.  When it comes to actually choosing from a field of over 15 different discount brokerages, many people would rather choose navel gazing than surfing through the dozens of financial information websites as a far less painful exercise.

In this week’s series we’ll take a look at where you can go online to find out about discount brokerages, what points to consider about when choosing the right discount brokerage firm for you, and one of the most important features that most potential customers look at when choosing a discount brokerage  – price.

In the meantime,  if you haven’t signed up to be a member of Sparx Trading, now would be a great time to do so, as you will have full free access to our brokerage reviews and comparisons (available here ) which we reference in this series. To register for Sparx you can click here .

 Read the next article in this series.

Posted on

SparxTrading Newsletter Launching Soon

Hey Sparx Members!

Now there is an added benefit to being part of the SparxTrading Network. We will be launching our newsletter this week featuring our favorite videos, articles and events and it will be going out to our members only!

Stay connected to the best of SparxTrading but don’t keep it all to yourself. Friends don’t let friends wear ugly ponchos and they certainly don’t let friends miss out on something this good so spread the word.

If you’re not a member and you’re reading this, what are you waiting for? Take a minute to  join Sparx and get access to top discount brokerage reviews, deals, research and expert insights all for free! Now, that’s a great trade!