When you want to buy and sell stocks, you might go to an online brokerage like TD Ameritrade and pay low trading fees. Or you can get on the phone and call people who will make trades on stocks, mutual funds, and bonds for you. And you’ll pay much higher fees (sometimes hidden ones) in the process.
Unless, of course, the person you’re trying to call is out on the golf course.
These higher cost traders operate in commission houses. They don’t just buy and sell stocks. They also can take care of settlement, or deal with a client’s margin accounts. The fees associated with commission houses are a major reason investors should learn to trade for themselves.
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Finance: What is commission?112 Views
finance a la shmoop. what is commission? well it's the greatest motivator for
salespeople in the world. it's the money some people make above and beyond their [ commission explained on a large screen]
salary. a little monetary carrot dangling out in front of a salesperson to you
know encourage them to sell sell sell. alright you're an agent who just sold a
house good for you. you get a 3% Commission. the house went for a million
bucks well you get 30 grand for the privilege or at least your brokerage
does, and then you get some piece of that. ok now you're the stock broker who sold
3 million shares of stock. well good for you
you get four cents a share in Commission 120 grand in the pocket of your
brokerage and you get some piece of that Commission. you're the Hollywood agent[equation]
who just inked Brad pitiful into a movie deal worth 20 million bucks, well good
for you your agency gets a 10% commission or two
million dollars. yeah that's for a Dewey Cheatham and Howe agency best one in
Hollywood. yeah they rep Harvey Weinstein. now for someone who's attempting to sell
a polished version of that Harvey Weinstein story well that's a commission
impossible. [man frowns]
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