I have a question regarding the transaction fees that brokers charge and to what extend that put a limit on the minimum amount of shares it is worth buying and how often you can/should trade them.
Say, for example, I have £1000 to invest in stock and my broker charges £10 for a transaction to be made.
After a few weeks my selected stock has performed well and I have made around £20, now I want to trade this and try a different stock that's looking profitable. My transaction sheet would look something like:
£1000 initial capitol
-£10 buy stock
-----------
£990 to invest
-----------
+£20 gain
-£10 sell stock
-----------
1000 to invest
-----------
-£10 buy stock
£990 in stock
From this it seems to me that the cost of trading stock is prohibitive on sums in the low thousands if you intend to make relatively frequent trades. Is this just a fact of life, must each transaction >£1000 or >>£20 profit to be worth it?
At what point does it become not worth trading your stock because the fee outweighs the benefit in return?
Thanks