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Time for no-fee trading platforms in the cryptocurrency market: Blessing or disguise?

Cryptocurrency
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It has been long since cryptocurrency has been popular amongst people from different backgrounds. One of the most exciting things about cryptocurrency is that its market is ever-evolving. Newer trends are coming up every now and then. Each news in this sector proves to be beneficial for some, and loss for the others. However, one thing that is undeniable is its progressive nature.

No-fee trading has been active for quite a long time now. It first started off with online stock as well as options trading, and now, with time, one can see it spreading a significant rate in the cryptocurrency market too.

The market pressure is on the rise

Trading platforms are considered to be an excellent way to make good profits digitally. Moreover, there are giants in the industry like BitMex and Binance Holdings Ltd. that have a major share in the cryptocurrency market from both the coin prices’ sagging as well as the trading volume. Thus, the expectations of these companies are high. The competition is so high, and this is the reason that each company is trying to offer maximum to its customer base to rank high in the sector. Every cryptocurrency company aims to get maximum users for its platform.

Charles Schwab makes huge gains by introducing a zero-commission policy

Here’s what happened recently:

  • Charles Schwab Corp. turned the game further by opening up a total of 142,000 new trading accounts in October 2019.
  • This was a significant jump as the numbers rose by around 31 percent from the month of September 2019.
  • This was possible for Schwab as it offered zero brokerage fee option to its traders.
  • Now, the company is generating a high income from the interest that it is earning on the cash holdings of the clients on the platform. This wave was a big and sudden hit for all the other organizations in the crypto world.

There have been other such firms in the crypto world too, like Robinhood, that have been offering no commission trading opportunities to its users. Is it a good or bad thing?

What are the pros of no-fee trading?

It is better to understand the most obvious advantage of this type of trading. If there is no commission fee charged, the traders will get to benefit as they will be able to keep more money with themselves. This will be seen as a beneficial thing, especially for the newer traders in the market. For instance, if a new trader starts with making about $5-$10, the commission fees literally eat up the profits.

Also, apart from the profits, the number of traders in the market will increase too. The reason for this is that all the traders lookout for options where they have to pay no minimum commission.

What could be the cons?

There are not many cons to it. However, one thing that the brokers who don’t charge you any commission fees do sell off your order flow. Certain organizations are popular as HFT firms or High-Frequency Trading firms. When a trader makes a trade on the platform, the broker sells off your data to one of the HFT firms.

Therefore, after knowing your move, the HFT firm first buys the same trade. Thus, hiking the price a little for you.

Is it a blessing or a disguise?

When one weighs the different pros and cons of no-fee trading, the pros undoubtedly outweigh the cons here. The brokers might be selling your order flows to the HFT firms. However, when it comes to comparing the commission fees being charged and the little extra money that the trader might have to pay because of order flow, the commission fees are definitely much higher.

Also, it is essential to understand that after looking out for their users’ interests, the brokers have to look out for themselves too! This new industry trend is indeed coming out to be a blessing rather than disguise.

Therefore, zero-commission trading is a great addition to the crypto world. It opens up great opportunities for newer traders on the platform. At the same time, the more experienced traders can seek advantage of it too. Keeping all these trends in mind, one should not forget about calculating the risks and forming the right trading strategy to sustain in the cryptocurrency market.


Augusta Health Augusta Free Press Kris McMackin CPA
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