ColumnThe hidden dangers of trading on the stock exchange

In the USA but also in Germany, more and more young people discovered the stock exchange for themselves in the Corona crisis. This generation owes its name to a free discount broker in the USA: Robinhood. They stormed the stock exchanges with enormously risky trades.

Robinhood traders courageously grabbed shares with a high dynamic, which brought them huge profits after the historic Corona crash in the spring. The associated upswing on the stock markets was therefore also referred to as the “robinhood rally”.

Getting started is made easy for young investors: many brokers have reduced their cost models to a minimum or even offer completely free transactions. Using a modern app and a playful user interface, the hurdle to buy shares has been reduced to a minimum. In this country too, new brokers and trading platforms have emerged with low fees or even free trading.

Take advantage of tough competition from brokers

You can only trade on the stock exchange with a securities account at a bank or broker. Here it is already worthwhile to look closely at the costs. Custody fees should be very low or should be completely absent. Something like this can also be negotiated individually, since the competition is not only very intense in the USA.

There are also two cost factors for ongoing exchange trading: exchange fees and brokerage fees. The former depend on the trading venue. Anyone who is active on foreign stock exchanges has to estimate higher costs than in Germany. The brokerage fees are low in some cases or even disappear completely for some brokers. Numerous newcomers are currently vying for every customer with favorable conditions. It is also worth taking a close look at these costs.

But the stock exchanges have also changed and offer cheap, specialized trading through their platforms and stock exchange segments. Regional exchanges such as Stuttgart, Hamburg, Berlin or Munich have focused on certain products. Investors benefit from this situation, such as with the gettex certificate platform of the Munich Stock Exchange. With more than 100,000 securities from all over the world, Munich offers a wide range of products from a real stock exchange – without fees and without brokerage. Investors can get more information on the homepages of the various German stock exchanges, which also provide information about the connected brokers.

Depending on the design, certain certificates such as capped bonus papers have a more interesting risk-reward ratio than a direct investment. An example of the DAX is the WKN VP33LH. The certificate currently offers a bonus yield of eleven percent or nine percent p.a. The only condition: by the end of the term on September 17, 2021, the DAX did not fall below the barrier of 9,400 points. The buffer to the south is a comfortable 25 percent. If the barrier is breached, the repayment is based on the development of the underlying.

Develop a sensible portfolio strategy

Even if the fees are low or no longer applicable, investors are not protected against losses when trading securities. After choosing the right broker, you should develop an investment plan to avoid mistakes in trading or investing. It is important to first acquire the basics of investing. Social trading providers such as eToro bring experienced investors and newcomers together via their platform.

This allows you to quickly learn the basics of the exchange, such as spreading your risk as widely as possible to improve your chances of success. This can offset losses from other profitable positions. In addition, everyone should know how securities work and which company or branch is invested in. In the long term, a share of up to 70 percent in shares makes sense if the investment period is at least ten years or longer. Exchange traded funds, or ETFs for short, are therefore not only popular with beginners. The papers represent an index and convince with favorable conditions and high transparency. The Comstage DAX-ETF (WKN ETF001) is one of the best-known products to track the performance of the leading German index at the lowest cost.

A savings plan can also help here, in which a monthly amount is invested in the stock markets. Savings plans usually start at 25 euros a month. The remaining portion can be supplemented with defensive bonds or commodities. Trading should only involve risk-sensitive investors who can use capital whose loss can be overcome. But this maxim should not only take newcomers to heart.

Daniel Saurenz operates the stock exchange portal Feingold Research. It offers a daily market letter, which you can test free of charge for 14 days. Register at or try the exchange service at this link


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