Options trading is becoming a popular trading strategy for regular retail investors. Options essentially give investors the right, not the obligation, to buy or sell a security at a predetermined price before or at an expiration date.
This trading strategy used to be exclusively a tactic for expert traders, but it seems everyone is quick to join in on the action.
With open platforms being available for even amatuer traders, anyone now has the ability to get in on the options trading game. However, just because the market is booming doesn’t mean everyone will be successful.
Matt Choi, the founder of Certus Trading, a trading education platform, told neoadvisor.com that the biggest reason why traders aren’t successful is because they “lacked structure in their trading.”
“They’d get distracted listening to financial news networks, which often contradicts their own analysis,” Choi explains. “They didn’t have a plan and if they did have one they weren’t disciplined enough to follow it. And as a result, there is a lot of analysis paralysis going on, and they can’t move forward with their trading.
If you’re looking to get in on the options trading uptake, here are a few of the best platforms you can use for 2022.
One of the most popular Canadian platforms, Questrade is a great platform for trading stocks, ETFs, and other financial securities. Questrade has more than 25 billion in customer assets and is relatively easy to use on their website. However, the app version of the platform is rated only 1.8 stars on the Apple App store 2.1 on Google Play.
For those specifically interested in trading options or stocks, you need a minimum of $1,000 in your account before you can make trades. This could possibly deter beginner investors due to the price commitment. However, you can sign up for a practice account if you’re not ready to take the plunge.
Options trading commissions are $9.95 per trade plus $1 per contract while active traders pay $4.95 per trade plus $0.75 per contract with a fixed plan. If you select a variable plan , you pay $6.95 plus $0.75 per contract.
An important thing to note however is that you will need an advanced data package ($89.95) per month to qualify for active trader pricing. For U.S. trading commissions, the pricing is the same, just in U.S. currency.
Interactive Brokers has three trading platforms: its website’s Client Portal, Trader Workstation, and IBKR Mobile (app). For new traders and beginners, the Client Portal or app is a good option.
Compared to its competitors, commissions are quite low, starting at $1.25 CAD per contract with a minimum $1.50 charge per order for less than 10,000 trades per month. For 10,001 – 50,000 trades per month, it’s $1.15 per contract, $1.05 per contract for 50,001 – 10,000 trades per month, and $1 per contract if you make more than $100,000 trades per month. There is still a minimum of $1.50.
There is no minimum account balance required to trade.
Recognized online brokerage innovator and sought-after financial advisor, Tom Sofnoff, is seen as a visionary and entrepreneur who co founded thinkorswin, tastytrade, tastyworks, and played an important role in the launch of Lunchbox Magazine. In 2020, he created the first new features exchange in 20 years, The Small Exchange.
In an interview with thriveglobal.com, Sofnoff encouraged anyone who wants to put money away for a long-term investment should consider learning how to trade.
“Learn how to trade. Trading is not about investing,” Sofnoff said. “It is about math, probabilities, strategy, decision making, and brain processing speed. They should learn how to trade.”
TD Direct Investing
TD direct Investing has four trading platforms: WebBroker (the website), the TD app, Advanced Dashboard, and thinkorswim. If you’re a beginner, WebBroker and the app are the best way to get started. The thinkorswim platform is for U.S. trading only.
The website is easy to use, making trading effortless online. The app can be used for regular banking and trading, and has favourable reviews on the Apple App store at 4.5 and Google Play 4.4. However, these numbers could be skewed due to the fact that it isn’t only a trading platform, but also a banking app, so reviews aren’t focused solely on the trading features.
Commissions for options trading is $9.99 per trade plus $1.25 per contract. Active traders (150 or more trades) pay $7 per trade plus $1.25 per contract. U.S. commissions are the same price, just in U.S. currency.
There is no minimum requirement to start investing and there are resources available for investment education, as well as live webinars, all of which are available for free regardless of if you’re not a TD client.
Traders like Choi, who started trading while in school, admits to making mistakes along the way on his site. He claims in a review by finetunedfinance.com that his experience gives him a unique perspective as he didn’t go to business school and started with a rookie’s understanding of the stock market. Now, through Certus Trading, he teaches others his personal approach to trading.
“My trading approach fits my personality and goals,” Choi said. “I have the freedom and flexibility to live a mobile lifestyle and spend time with my loved ones and share. That’s the kind of success and freedom that I would like all my Certus Trading students to enjoy.”