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Cost of Trading
The cost of trading includes more than commissions, fees, and premiums. The cost of trading takes in all monies paid and foregone in the pursuit of opportunity in trading stocks, commodities, futures, and options contracts. Online brokers can attract clients with the promise of low commissions. Although commissions count in the cost of trading they can pale in comparison to the cost of trading in low volume with large spreads between bid and ask prices if traders do not place limit orders. The cost of small cap stock investing especially can mount up if volume is low and liquidity nil. Part of trading analysis needs to extend beyond the spot price and the strike price, beyond Candlestick chart analysis and fundamental analysis to look at the cost of trading in various markets and conditions.