Replies to post #93 on The "Stock Trading Riches" Investment Sy

[AIMster]

I'm going to look more into folio investing - sounds like they may be able to save money, even over a discount broker.

Praveen,

Having been their customer since 2001, I can give you some details as to how it works.

Rather than a per-trade commission they offer a flat membership of which their "unlimited" package allows unlimited folios (or groups of holdings, up to 100 per folio) and unlimited window trades per month. Yes, you can trade directly to the market or place GTC orders, but there is a nominal charge for these.


Folio Unlimited Plan - Annual
$290.00 a year for Unlimited Folios
$3.00 per trade for Market Orders
$3.00 per trade for Limit, Stop, or Stop/Limit Orders
Free Unlimited Window or Auto Investment Trades

Window trades are twice-a-day trades (11 AM and 2 PM) where you can place buy or sell orders. What's interesting about them is that they will internally match orders between customers, before sending the order out to the market, giving a better price on the bid/ask since the order is filled internally. Probably happens most often with bigger stocks that are widely held, but I suppose it still counts for something. Orders may be placed in either exact dollar amount, or in exact share amount. They support fractional shares out to 5 decimal places.

So, in terms of value, then, compared to a discount broker, if you're willing to work within their window trade structure, using a $7.99 transaction price for comparison, Folioinvesting achieves cost parity at the 37th trade and becomes progressively more cost efficient with each additional trade.

500 trades, for example, at the discount broker cost $3995. At Folioinvesting, $290. You do the math. <grin>.

Given this dynamic, the need for a minimum trade size is reduced, if not altogether eliminated. The only trade-off with their window system is that by the time the window closes, the settled price may have moved more-or-less in your favor.

Not sure how well it would work for you doing annualized trading, but if your total number of holdings are getting to the point where the cost savings become real enough to save you money, might be worth doing.

Best,

AIMster