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Question about online stock trading sites?

Question about online stock trading sites?

Postby melvon91 » Thu May 16, 2013 4:44 pm

Why do most online stock trading sites (such as E-Trade) require a ONE TIME $500 (or other amount) cash deposit within 2 months of opening the account in order to keep the account active? What is the purpose of that deposit?
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Question about online stock trading sites?

Postby kerwin » Thu May 16, 2013 4:53 pm

Stock trading sites offer you services, like tools for picking stocks and access to databases of information that cost them money to subscribe to or to produce. They want you to put a minimum amount of money on deposit so that they can earn some interest on the deposit, otherwise, what stops you from opening an account, using their services and tools, never buying or selling any securities, and getting something for free? These sites want to do business with people who are serious about investing and these sites make money by charging commissions on transactions you make with them. But, they can't force you to make transactions to generate commissions, so the deposit helps ensure they can earn something, even if you aren't activity trading.
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Question about online stock trading sites?

Postby radmund » Thu May 16, 2013 5:24 pm

1) It costs them some marginal amount of money to have accounts open.

2) It pushes people to put money with them.

3) Why would you open a money account if you weren't going to? If you're just trading for play money, then sign up for a paper account.
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Question about online stock trading sites?

Postby darroch96 » Thu May 16, 2013 6:06 pm

1) It costs them some marginal amount of money to have accounts open.

2) It pushes people to put money with them.

3) Why would you open a money account if you weren't going to? If you're just trading for play money, then sign up for a paper account.
It's an incentive to get you to move. They figure, if you're not serious about using the account, it might as well be closed. Any good business model would do this.
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