How can you prevent losses with eTrade

The biggest cost traps in online trading

Ideally, trading entices big profits. The risk of loss, however, is just as high. Here are eight of the top cost traps to avoid.

First: Pay excessive custody fees

Banks in Switzerland often charge very high custody fees. The perfidious thing about it: custody fees are due even if you have only deposited securities in the bank without actively trading. At most banks, you also pay ongoing custody fees for passive products such as ETFs. A prior comparison of the custody fees is worthwhile.

Second: Pay too high brokerage fees

Swiss banks and online brokers charge particularly high fees for transaction costs, the so-called brokerage fees. Brokerage fees always apply when securities such as stocks are bought or sold. The differences between the cheapest and most expensive providers can be more than tenfold. In addition, there are state stamp taxes, which are the same for all providers.

Third: choose an online platform that is too expensive

In addition to custody fees, brokerage fees and stamp taxes, various other fees may apply, including foreign currency costs, stock exchange fees, account fees, flat-rate and other special fees. Those who trade more often can save thousands of francs every year by choosing the cheapest platform.

moneyland.ch has therefore programmed a neutral trading comparison with which you can easily, free and accurately calculate the costs for your individual user profile and the securities you want. The comparison is unique in Switzerland and, thanks to tailor-made algorithms, can also take account of exceptions.

Fourth, choose a dubious broker

Hundreds of online brokers and trading platforms worldwide offer their services to an international clientele. Some of these brokers based abroad also advertise for Swiss customers. But watch out: In trading, many “black sheep” offer their services for sale. Dubious and poorly regulated providers are particularly widespread in Forex, CFD and options trading. In the worst case, there is a risk of total loss. Swiss online brokers, who as banks are regulated by the Swiss Financial Market Supervisory Authority (FINMA), offer greater security. The online broker comparison on moneyland.ch therefore only lists Swiss providers with a FINMA license.

Fifth, buy products that are too risky

Trading is risky. Depending on the product, there is even a risk of total loss. Therefore the rule of thumb applies: only buy what you know. Refrain from trading structured products, CFDs or forex if you are unsure of how these products work. If you shy away from risk, you should avoid speculative instruments altogether. But even with simple stocks, you have to be aware of the risk of loss.

Sixth, buy products that are too expensive

It's not just the trading fees that matter. The traded products themselves can also have their price. Many Swiss investors are in possession of actively managed investment funds. Many of these mutual funds are far too expensive. In most cases, administration fees of significantly more than 1 percent are incurred. In addition, there may be other hefty costs such as issue and redemption fees. Passive ETF products are usually much cheaper.

Seventh: Put everything on one card

Even with supposedly low-risk products such as bonds or ETFs, there is a risk if you put all your assets "on one card". It is wiser to choose between different asset classes. If you are actively trading with more risk, you should only do so with the money that you do not need for everyday life. You should also «mentally write off» your investments in stocks. The greater the joy is when you still make a profit.

Eighth: Just start trading

Find out in advance about the securities you want to buy. You should also obtain prior information about your future trading platform. It is advisable to first set up a demo account with the online broker of your choice before trading with real money. You can open demo accounts free of charge in the broker comparison on moneyland.ch.

Further information: Broker comparison in Switzerland