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Trading 101: Online Broker Fees Explained - YouTube
Channel: ClayTrader
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you're interested and participated in
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the market you found these online
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brokers but how exactly does it all work
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from a cost and fee perspective that's
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what I'm going to break down here this
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video is clearly gauged for those that
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are newer to the market but if you're
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new to the point where when I say stock
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market you have no idea what I'm talking
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about
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be sure to go and watch and you know
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just kind of scan through my trading 101
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series where I go over a lot of those
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very very basic things but if you do
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understand all that maybe you've already
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gone through those videos and now you're
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kind of crossing those bridges of online
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brokers how exactly does it work maybe
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you understand that yeah if I will just
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use the stock market for example if I
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want to get involved in the stock market
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I need to be able to buy stock and in
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order to buy stock I need to use this
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thing called a brokerage preferably an
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online broker but from there how exactly
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is it all working from a fee and cost
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perspective how much is how much is
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gonna cost me pretty much to boil it
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down maybe you're at that bridge how
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much is all this gonna cost me well my
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answer is it depends I don't I hate to
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be that shady but that's the fact of the
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matter it just depends not only what
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sort of broker you're using but also the
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cost structure that they are gearing
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towards you now full disclosure here am
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I gonna go into every little nook and
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cranny I'm not gonna do that like I said
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this is a surface deep understanding so
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that's somebody that is very new has a
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good broad idea of what to pay attention
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for and just how things are structured
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from again more so an overall type
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viewpoint so first thing like I said
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because this is basically the question
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right here is how much the first layer
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of all this is the broker there are all
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sorts of brokers out there and them in
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and of themselves are gonna have
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different rates and for that I can't
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even attempt to do that I remember I did
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an e trade video once about them being a
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massive ripoff and now that video is
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totally obsolete because they've
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actually lowered down the rates and they
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are still a ripoff because you know that
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would depend on your strategy but that's
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a whole nother story point being I'm not
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gonna assign prices here just understand
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that yes how much is it going to cost
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you well that first layer of it depends
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is
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the broker themselves everybody has
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different fee structures and you know
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just prices up they're gonna charge the
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second is if once you pick a broker
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within that broker sometimes they allow
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you to choose what sort of you know
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route you want to take other times we're
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just going to say hey this is it no
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matter what but there's going to be
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either a cost per share or they're gonna
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do a cost per trade so let's just say
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for example that we have Rupert here
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we're doing seriously where do I come
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for these names
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Rupert Rupert is saying alright I'd like
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to buy a hundred shares so he wants to
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buy a hundred shares of something so
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here's Rupert he wants to buy 100 shares
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and he's saying alright well if I do a
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cost per trade so for this a cost per
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trade remember we're at the blue broker
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okay so what broker blue the cost per
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trade and they are they're going to
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actually give him a choice that he can
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choose now against some some brokers may
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not give you a choice but blue broker
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does and the cost per trade is let's
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just say five dollars so when Rupert
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goes to buy those hundred shares how is
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it how much it is gonna cost them well
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it's portrayed so he wants to buy which
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is a trade so just very basic five
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dollars it's gonna cost them what
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happens if he goes and buys a thousand
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shares how many five dollars its
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portrayed
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what happens if he goes and buys a
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hundred thousand shares how much is in a
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costume
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five dollars hopefully I'm not tricking
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you
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very straightforward there now on the
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flip side of things let's say the cost
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per share is I don't in the SUP to keep
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the math easy for my feeble mind but
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let's just say a dollar per share
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now right off the get-go nobody's gonna
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charge you a dollar per sure but this is
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just to keep the math very very simple
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so if it's Dow it for sure and he wants
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to buy 100 shares well what's the math
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there well dollar per share times 100
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equals what $100 that's pretty expensive
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and then so on and so forth if he wants
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to buy a thousand it just obviously this
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structure here would not make sense now
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in the vast majority of cases cost per
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share is going to be geared towards the
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very very active day trader somebody
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that's holding four minutes maybe 20
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minutes maybe a couple of hours but they
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are in and out in and out they are boom
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boom boom and they're doing a lot of
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volume over and over and over again and
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those prices usually you can get down to
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0.003 per share 0.004 per share
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sometimes even lower depending on how
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many so you start to run those numbers
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0.002 at a hundred shares 0.003 now
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point oh two point oh oh
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- so I mean a more realistic one like I
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said point zero so free office spant
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office space fans out there
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remember decimal points are important
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but you know point oh you know three
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five for example it could be something
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that's more typical so you do the math
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on those and you say alright things
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bring you know come down to the line but
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this would definitely be more so a very
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very active day trader as far as cost
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per trade these are just investors
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these are swing traders something that's
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buying and saying yeah maybe I'll sell
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within several days maybe I'll sell
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within a couple of weeks heck maybe I'll
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sell within a few months you know
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they're just they're not super super
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active so that's gonna be you know more
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so something that may fit them now this
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that's just these are all just general
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rules of thumb and that's why I want to
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just explain how they're Pross
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you know structured so that you can
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process each situation for what your
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goals are for what your strategies are
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and figure out what may be the best
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route for you to choose now the other
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thing that I get a lot of question of is
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let's say that Billy Bob puts in the
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order for a hundred so he says he wants
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to buy so he types in the stuff online
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and he wants to buy 100
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does that cost some money to enter in
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the order
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so in lingo turns that's just called
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entering in you're entering in an order
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nothing fancy but does enter in and cost
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any money no $0 and if anybody is trying
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to charge you money to simply enter in
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an order run the other way that's just
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that's messed up that's don't do that
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now if billy-bob all of a sudden let's
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say gets just randomly he wants a
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hundred but then he only gets fifty of
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those 100 well a trade has begun so a
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fees are going to apply now what type of
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fees well that depends on the type of
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structure but fees will apply let's say
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he then cancels and says well I wanted
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100 so he hits cancel and that order
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goes away but he still bought 50 but he
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still wants 50 more as soon as Rupert
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puts out another 50 and they get
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executed that is now a whole separate
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trade so if he is on cost per trade that
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can start to add up very very quickly
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whereas if over here it doesn't matter
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because it's per share so whether he
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gets a hundred here or just 50 it
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doesn't matter but when you start to do
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per trade and you start to say ah well I
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only got this so I'll just cancel it
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then I'm gonna enter in a new order when
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you enter in that new order if you're
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doing this cost structure over here that
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is where things can add up very very
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quickly so you got to be aware of that
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overall though that is just how brokers
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are making money and how the fees and
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such are structured as far as other fees
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you know all of them have pricing and
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fees somewhere on their website you know
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some will let you transfer money in for
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free
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some will charge you for different
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aspects oh you want that sort of payment
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method oh you want to transfer money in
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that way you don't and they may charge
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you fees here there so you just kind of
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got to go through all those you know
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this video could be hours long if I went
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through each and every one of those
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lines like I said my main focus is to
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give you an overarching structure of how
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things are all set up so that you can
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approach and crunch the numbers on your
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own to figure out well you know first
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off a lot of legs that a lot of brokers
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they'll just say it's cost per trade but
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if some brokers like the broker I use
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Lightspeed they will say
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you have to select what sort of
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Commission structure you want because I
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am very active in the markets I do per
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share but there's a per trade available
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too so assuming that they do give you a
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choice that is up to you to grab your
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calculator crunch your numbers figure
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out what numbers fit bet to your best in
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your strategy well I don't even have a
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strategy well exactly
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first go get a strategy and that's why
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then you second can start to focus on
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this stuff but at this point you know
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and this is a good example of why people
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that focus on this stuff before ever
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even having a strategy are getting way
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far ahead of themselves because it's
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literally impossible to figure out what
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structure you should be using unless you
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have a strategy in the first place and
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start to say this but buy low sell high
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is not a strategy okay let me just get
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that out of the way right now
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overall though that's how it's set up so
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first go out there and get a strategy
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learn about how to form a strategy learn
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about the tools that are available and
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then in all honesty this is one of the
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last things you should be coming back to
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within your journey because you're gonna
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have no idea what structure to be using
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until you know what your strategy and
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systems and all that stuff are which is
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what the whole learning experience you
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know is all about and if you are a quick
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little plug here if you are interested
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and learning how to build strategies and
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systems and the tools that I use you can
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go to clay trader comm I offer many
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online training courses on that with
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that being said hopefully this helps let
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me know if any questions down below if
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you are out there trading alone
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currently and maybe are in the market
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looking for a community to join to
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assist you in your trading or to just
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help you you don't give you another set
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of eyeballs that I do have a private
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trading community where you can trade
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alongside me and other experienced
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traders so what you see popping up on
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the screen right now is both an
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information link so if you click on the
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inner circle one that is going to take
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you to the page where I explain all the
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details of what exactly come with the
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community both the chatroom and the
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newsletter and then the other image that
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has popped up is a behind-the-scenes
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tour where you can see exactly what is
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going to you know be contained within
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the community I take you through like I
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said behind-the-scenes tour of
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everything and that way you'll know
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precisely what you are getting you know
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when you join so definitely check that
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stuff out if you are interested and
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thinking about you don't want it to join
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a community and let me know if you have
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any questions
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