Passive Trading vs. Active Trading

Passive Trading vs. Active Trading

Passive Trading vs Active Trading

Most investors that are either beginners or experts identify themselves as two types of traders, each with their own benefits and disadvantages. The first type being the slow-and-steady passive trader who prefers to hold their investments over the long run. The second type being the fast-and-aggressive active trader who prefers to make multiple trades over shorter periods of time. But which type would you identify yourself as?

 

Active Trader

Active traders use the more aggressive buy and sell strategy, with the purpose of generating profits through correctly anticipating certain market/stock movements. These investors will trade daily/weekly in multiple investments

Advantages

  • If done correctly active traders may earn much more profit than passive traders since they are always looking for the best point to sell

  • Active traders have more flexibility when making trades, they can choose when to enter and leave the investment at any time

Disadvantages

  • Active trading is often more expensive than passive trading as more commissions are paid out per trade

  • Risk of losses can be higher as active traders need to correctly predict the direction of the stock in order to gain. One wrong prediction could result in a loss which could negate all gains earned previously

  • Time and effort must be implemented to do research on the investment and to make the trades properly

 

Passive Trader

Passive traders often use the buy-and-hold strategy, they purchase one or multiple investments for the purpose of cashing out many months or even many years later. Most often, passive traders invest in index funds (funds that own fractions of multiple stocks in the market).

Advantages

  • Passive traders pay less fees using the buy-and-hold strategy, especially commission fees as they do not trade very often

  • Income is more guaranteed and losses are less prominent as studies have shown that over the long run, the stock market shows a general trend of increasing in value over long periods of time

  • Investing in index funds such as the S&P 500 and Dow-Jones generally does not require much research, which save time and effort

     

     

     

    Disadvantages

    • Traders must consistently resist the urge to exit the market if the investment becomes unfavorable

    • Returns may not be as high compared to active traders as passive traders may not sell their investment at its best price

Start trading like a professional

Royal West Indies Brokers gives you access to the best online trading platforms. We have selected the best platforms that are used for professional trading. At RWIB we offer you a personal trading platform, which is easy to use for beginners and professional traders. With the click of a mouse you can start buying and selling stocks, options, futures and more on the world’s largest exchanges. Start trading like a professional. Open a trading account today.  

  • Loading stock data...

Competitive pricing

  • US Stocks from $7.50
  • Options from €2.00
  • No custody or service fee

Professional trade tools

  • Stable and reliable trading platform
  • Comprehensive technical indicators and trading tools
  • 60 different order types

Worldwide investing

  • 100+ exchanges
  • 24 countries
  • Europe, America, Asia and Australia

Training

  • Regular webinars
  • Training sessions in our offices
  • Documentation on trading
What is the difference between a Margin and Cash account?

What is the difference between a Margin and Cash account?

Cash vs Margin Account: What’s the Difference?

When you apply for a brokerage account you may notice that there are two types of accounts that you may obtain. These account types determine what you can and cannot do on your account. But what are these account types and what does that mean for you as a trader?

Cash Account

A cash account is available for anyone over the age of 18 years old. These accounts have the following features:

  • Unlimited Day Trading (in and out of a position on the same day)

  • May not own short positions or borrow funds for investing

  • Funds for trading are limited to the amount of cash that was sent to the account

  • Have limited features with regards to exchanges (Limited to trading stocks, bonds, and forex)

Margin Account:

A margin account is available to those who are over the age of 21. These accounts have the following features:

  • Limited Day Trading (3 times every 5 business days). Violating this rule will flag your account as a potential pattern day trader and you will be unable to buy into positions for a number of days.

    • Number of days the account is unable to buy into positions is determined based on the number of times the rule was violated

  • Unlimited Day-Trading for accounts with a Net Liquidation Value of over $25,000 USD or currency equivalent

  • Accounts with over $2,000 USD or currency equivalent may short positions and trade with leverage

  • May trade in exchanges such as Options and Futures

If you are a trader who prefers to trade passively with no risk of borrowing interest rates, a Cash Account may be more suitable for you. If you are a trader who is less risk adverse and has a preference for larger returns over a shorter period of time, a Margin Account may be more suitable for you.

Start trading like a professional

Royal West Indies Brokers gives you access to the best online trading platforms. We have selected the best platforms that are used for professional trading. At RWIB we offer you a personal trading platform, which is easy to use for beginners and professional traders. With the click of a mouse you can start buying and selling stocks, options, futures and more on the world’s largest exchanges. Start trading like a professional. Open a trading account today.  

  • Loading stock data...

Competitive pricing

  • US Stocks from $7.50
  • Options from €2.00
  • No custody or service fee

Professional trade tools

  • Stable and reliable trading platform
  • Comprehensive technical indicators and trading tools
  • 60 different order types

Worldwide investing

  • 100+ exchanges
  • 24 countries
  • Europe, America, Asia and Australia

Training

  • Regular webinars
  • Training sessions in our offices
  • Documentation on trading
Who is Royal West Indies Brokers?

Who is Royal West Indies Brokers?

ROYAL WEST INDIES BROKERS (“RWIBrokers”) is the first (and to-date only) licensed securities intermediary of the Dutch Caribbean by the Central Bank of Curacao and Sint Maarten and the first licensed asset manager on Sint Maarten. RWIBrokers has established proof-of- concept as the first online broker in the Dutch Caribbean. 

CBCS and further licensing

RWIBrokers is incorporated on Sint Maarten as an LLC (in Dutch: “naamloze vennootschap”) and obtained the first (and to-date only) economic license of Sint Maarten to operate a brokerage and asset management firm. An economic license is a conditio sine qua non to operate a business on Sint Maarten. RWIBrokers informed the Central Bank of Curacao and Sint Maarten (“CBCS”) of its intention to start operating an iBroker and since Q4 of 2018 RWIBrokers was granted a license for securities intermediary and asset management.

The CBCS licenses for securities intermediaries (#0001LSI) and asset managers license (#0004LAM) enables RWIBrokers to operate in and from Curacao and Sint Maarten.

State-of-the-Art Technology

Real-time market-risk management and real-time monitoring provide a comprehensive measure of risk exposure across multiple asset classes around the globe and real-time data that gives traders the edge they need to react quickly to the markets.

Our statements and reports include real-time trade confirmations, margin details, transaction cost analysis, sophisticated portfolio analysis, tax optimization and a variety of other supplemental reports. ‘Portfolio Analyst’ lets our clients combine RWIBrokers account data to create a consolidated view of their complete financial portfolio.

Our User Access Rights system allows a trader to assign different account management functions to individual employees within your organization if such is required.

Lincense for Secutity Intermediary granted by the CBSB

The CBCS licenses for securities intermediaries (#0001LSI)

 

License for Asset Manager granted by the CBSC

The CBCS licenses for asset manager (#0004LAM)

 

 

What do we offer?

We now offer  Asset Manager and Brokerage Services (self trading and investing) to our clients throughout the Caribean for all islands and surroundings: 

Antigua and Barbuda, Barbados, Colombia, Bolívar Department, Córdoba Department, Magdalena Department, San Andrés and Providencia Department, Sucre Department, Cuba, Dominica, Dominican Republic, Suriname, Venezuela, Panama, Belize, Guadeloupe, Martinique, Saint Barthélemy, Saint Martin, Grenada, Haiti, Honduras, Jamaica, Aruba, Curaçao, Sint Maarten, Nicaragua, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Trinidad and Tobago, Anguilla, British Virgin Islands, Cayman Islands, Montserrat, The Bahamas, Turks and Caicos Islands and much more…

 

 

Start trading like a professional

Royal West Indies Brokers gives you access to the best online trading platforms. We have selected the best platforms that are used for professional trading. At RWIB we offer you a personal trading platform, which is easy to use for beginners and professional traders. With the click of a mouse you can start buying and selling stocks, options, futures and more on the world’s largest exchanges. Start trading like a professional. Open a trading account today.  

  • Loading stock data...

Competitive pricing

  • US Stocks from $7.50
  • Options from €2.00
  • No custody or service fee

Professional trade tools

  • Stable and reliable trading platform
  • Comprehensive technical indicators and trading tools
  • 60 different order types

Worldwide investing

  • 100+ exchanges
  • 24 countries
  • Europe, America, Asia and Australia

Training

  • Regular webinars
  • Training sessions in our offices
  • Documentation on trading
What fees does a broker charge?

What fees does a broker charge?

What Are Brokerage Fees?

In general, brokerage fees are fees the broker charges you to hold and manage your investments. These fees might include annual fees, fees for researching investment data, and inactivity fees if you aren’t trading regularly. It’s important you are aware of the different types of brokerage fees, as well as the types of brokers available to manage your investments. Be aware of hidden fees these will cost you a fortune (bid-spread widening, holding fees, option execution fees, etc), we will disscuss them in a seperate blog post.

Full-Service Broker

Full-service brokers are paid commissions based on transactions. The average fee per transaction at a full-service broker is $150. This is much lower than in the past but still much higher than discount brokers where on average a transaction costs approximately $10.

At a full-service broker, you are paying a premium for research, education, and advice. But it’s important to remember that full-service brokers are also salespeople.

There are also full-service brokers that charge an annual fee between 1% and 1.5% of total assets managed for a client, so will eschew per-trade charges. If you don’t feel comfortable researching and making your own trades, this is a good option to consider. These brokers will also have an incentive to perform well because if your portfolio performs assets under management increase, meaning they make more for managing them. If you’re interested in the full-service broker, please contact clientservices@rwibrokers.com

Discount brokers generally do not offer investment advice. Trading fees for online discount brokers range anywhere from $7.5 to $20, but most are between $10 and $15. These rates are subject to change.

Most investors don’t bother reading Securities and Exchange Commission (SEC) filings, but SEC filings are available to the public and the information within them is like taking an open book test. The answers are provided for you. Unlike press releases, a public company must state the facts in its SEC filings. This makes it relatively easy to research stocks.

Also, pay close attention to industry trends. If fast-casual food chains that offer natural and organic food are in, go with the trend, not against it. Do your research to determine the best of the breed. And you don’t even need to dive that deep. As a general rule, if the broader market is hot, revenue growth will be the key factor driving stock price appreciation. Investors and traders love revenue growth in bull market environments. If the broader market is cold, net income growth and a strong balance sheet will be the keys to success. Investors and traders like to run to safety for dividends and share buybacks in these environments.

The Bottom Line

If you’re impulsive and/or not willing to do your homework, then you should consider a full-service broker. Otherwise, a discount broker, which allows you to execute trades but does not offer investment advice, is a better option.

Fees RWIBrokers.com

Stocks

Currency/ExchangeMinMax*% of trade valueExchange, Regulatory & Clearing Fees
AUD (%)20-0.3x
CAD (shares)101.5%0.02 dollar/share-
CHF (%)30-0.3x
CNH (%)100-0.3x
EUR (%)2.25-0.08-
GBP (%)10-0.2x
HKD (%)50-0.3x
HUF (%)3000-0.3x
JPY (%)1000-0.3x
MXN (%)160-0.6x
NOK (%)100-0.3x
PLN (%)45-0.3x
SEK (%)80-0.3x
SGD (%)20-0.3x
USD (shares)7.501.5%0.015 dollar/share -

 

CFD on Stocks

Currency/ExchangeMinMax*% of trade valueExchange, Regulatory & Clearing Fees
AUD (%)20-0.15x
BRL (%)120-0.3x
CHF (%)30-0.15x
CZK (%)250-0.3x
DKK (%)80-0.15x
EUR (%)10600.1-
GBP (%)10-0.1x
HKD (%)50-0.15x
JPY (%)1000-0.1x
NOK (%)100-0.15x
SEK (%)80-0.15x
USD (shares)7.501%0.015 dollar/share -
ZAR (%)150-0.3x

 

Options

Currency/ExchangeMinper optionExchange, Regulatory & Clearing Fees
AUD (Contracts)1010x
CAD (Contracts)55-
CHF (Contracts)1010x
EUR (Contracts)3.53.5-
GBP (Contracts)77x
HKD (Contracts)120120x
JPY (Contracts)25003000x
KRW (%)40000.05x
NOK (Contracts)4040x
SEK (%)800.05x
USD (Contracts)3.53.5-

 

Futures

Currency/ExchangeMinper futureExchange, Regulatory & Clearing Fees
AUD (Contracts)1010x
CAD (Contracts)88-
CHF (Contracts)1010x
EUR (Contracts)66-
GBP (Contracts)77x
HKD (Contracts)120120x
JPY (Contracts)25002500x
KRW (Contracts)1000010000x
MXN (Contracts)140140x
NOK (Contracts)5050x
SEK (Contracts)100100x
SGD (Contracts)88x
USD (Contracts)66-

 

Forex

Currency/ExchangeMin% of trade value
AUD (%)100.006
CAD (%)100.006
CHF (%)100.006
CNH (%)500.006
CZK (%)1500.006
DKK (%)400.006
EUR (%)50.006
GBP (%)50.006
HKD (%)500.006
HUF (%)20000.006
ILS (%)250.006
JPY (%)7500.006
MXN (%)1200.006
NOK (%)500.006
NZD (%)100.006
PLN (%)250.006
RUB (%)4000.006
SEK (%)1000.006
SGD (%)100.006
USD (%)60.006
ZAR (%)1000.006

 

CFD on Forex

Currency/ExchangeMin in USD% of trade value in USD
AUD (%)30.005
CAD (%)30.005
CHF (%)30.005
CNH (%)30.005
CZK (%)30.005
DKK (%)30.005
EUR (%)30.005
GBP (%)30.005
HKD (%)30.005
HUF (%)30.005
ILS (%)30.005
JPY (%)30.005
MXN (%)30.005
NOK (%)30.005
NZD (%)30.005
PLN (%)30.005
RUB (%)30.005
SEK (%)30.005
SGD (%)30.005
USD (%)30.005
ZAR (%)30.005

 

Warrants

Currency/ExchangeMinMax*% of trade valueExchange, Regulatory & Clearing Fees
AUD (%)20-0.3x
EUR (%)10600.2-
HKD (%)50-0.3x
IBFP
EUR (%)10600.2-
USD (%)10-0.2-

 

Metals

Currency/ExchangeMin% of trade valueExchange, Regulatory & Clearing Fees
USD (%)100.15x

 

Mutual Funds

Currency/ExchangeTicket ChargeMinAbsolute Markup% of trade valueExchange, Regulatory & Clearing Fees
EUR (%)-10-0.15-
Global (Transaction)15-0--
USD (Transaction)10-0--

 

Bonds

Currency/ExchangeMinMax% of trade valueExchange, Regulatory & Clearing Fees
EUR (%)10600.1-
HKD (%)100-0.2x
USD (% of Face Value)10-0.015-

 

Other fees

Withdrawals to your bankaccount

The first chargeback in a calendar month is free. For each subsequent reversal the rates apply in the following table:

Currency Methode Tarief
EUR SEPA EUR 1,00 per withdrawal
EUR WIRE EUR 8,00 per withdrawal
USD WIRE USD 10,00 per withdrawal

The above costs do not relate to any costs charged by third parties. The account holder is solely responsible for any additional costs charged by the beneficiary or corresponding bank. In addition, processing costs charged by your bank or its corresponding bank, which are not included in RWIBrokers.com's chargeback costs, can be deducted from the refundable amount.

For more information about the chargeback costs of the other currencies, please send an e-mail to clientservices@rwibrokers.com

Cancel / Adjust costs

Type cost Costs per order Execution credit
Cancel/Adjust optionorder US USD 0,01 USD 0,005 per contract (max. USD 0,01 of USD 0,035 per order)
Cancel/Adjust option- or futureorder on Eurex EUR 0,50 EUR 2,50 per execution same product same dag
Cancel/Adjust Direct Routed Order naar TGATE EUR 0,50 EUR 2,50 per execution same product same day
Cancel/Adjust orders other exchanges Free No fees

Partial Executions

If an order concerns partial execution over several trading days, a commission will be charged for each trading day. This is also the case if after a partial execution, the remaining order is adjusted. This is seen as a new order whereby transaction costs are again charged.

Inactivity Fees

If the value of your trading account is less than USD 1,000 (or equivalent in another currency) and you have paid commission less than USD 1 (or equivalent in another currency) in a given calendar month, inactivity costs will be charged. . The amount of this inactivity costs is calculated as follows: Inactivity costs = USD 1 - commission paid in calendar month

Exposure Fee

RWIBrokers.com charges a daily exposure fee for a small minority of accounts that have a very high worst-case loss risk. This is to protect RWIBrokers.com and its clients against accounts that hold high-risk positions that currently meet the margin requirements of the stock exchange, but can nonetheless still achieve excessive losses in the event of a significant market movement.

Implicit Transaction Costs

In addition to explicit transaction costs which EasyBroker charges, there are also implicit transaction costs. These costs are based on the bid / offer spread. At the moment you send an order to the stock exchange, there is a so-called price of arrival, the mid-price. If your order is executed for a higher or lower price than the mid-price, then the implicit costs are the difference between the mid-price and the execution price. These costs are implicit because they are not visible on the order confirmation and are not charged by RWIBrokers.com itself. The bid and offer prices are realized by buyers and bidders on the market and are beyond the control of EasyBroker.

Exchange, Regulatory & Clearing Fees

Where in the rate overviews is ticked by means of a cross that there is Exchange, Regulatory & Clearing Fees, RWIBrokers.com charges these costs to its customers in addition to the transaction costs of RWIBrokers.com. An overview of these costs can be found here.

 

 

 

 

What is daytrading?

What is daytrading?

There was once a time when the only people who were able to trade actively in the stock market were those working for large financial institutions, brokerages, and trading houses. But, with the rise of the internet and online trading houses, brokers have made it easier for the average individual investor to get in on the game.

Day trading can turn out to be a very lucrative career, as long as you do it properly. But it can also be a little challenging for novices—especially for those who aren’t fully prepared with a well-planned strategy. Even the most seasoned day traders can hit rough patches and experience losses. So, what exactly is day trading and how does it work?

Key Takeaways

  • Day traders are active traders who execute intraday strategies to profit off price changes for a given asset.
  • Day trading employs a wide variety of techniques and strategies to capitalize on perceived market inefficiencies.
  • Day trading is often characterized by technical analysis and requires a high degree of self-discipline and objectivity.

The Basics of Day Trading

Day trading is defined as the purchase and sale of a security within a single trading day. It can occur in any marketplace but is most common in the foreign exchange (forex) and stock markets. Day traders are typically well-educated and well-funded. They use high amounts of leverage and short-term trading strategies to capitalize on small price movements in highly liquid stocks or currencies.

Day traders are attuned to events that cause short-term market moves. Trading the news is a popular technique. Scheduled announcements such as economic statistics, corporate earnings or interest rates are subject to market expectations and market psychology. Markets react when those expectations are not met or are exceeded, usually with sudden, significant moves, which can benefit day traders.

Day traders use numerous intraday strategies. These strategies include:

  • Scalping, which attempts to make numerous small profits on small prices changes throughout the day
  • Range trading, which primarily uses support and resistance levels to determine their buy and sell decisions
  • News-based trading, which typically seizes trading opportunities from the heightened volatility around news events
  • High-frequency trading (HFT) strategies that use sophisticated algorithms to exploit small or short-term market inefficiencies