For a period, Singaporeans could only envy U.S. investors who has access to $0 commission trading. Now, the reality has finally reached our shores as the competition among brokerages has driven the commission rate for U.S. trading to $0.

moomoo trading app has just announced it – permanent $0 commissions for US trading effective from 13 Apr 2022 onwards for eligible customers.

Besides the commissions, Futu SG (moomoo) has also waived the platform fee of US$0.99 per order for a year. This is applicable for existing customers between 13 Apr 2022 and 12 Apr 2023. For new clients, the 1-year period will start from the day they open their account.

But note that you will still need to pay fees charged by the U.S. authorities such as SEC fees, settlement fees, FINRA trading activity fees and ADR custodian fees, which would be the same amount charged by any other broker. Moreover, these fees are usually insignificant when compared to commission fees.

Comparing other $0 commission brokers in Singapore

Some would argue that TDAmeritrade has been offering $0 commission trading in Singapore for quite some time. It is true but as an investor who also invests in China and Singapore stocks, TDAmeritrade does not offer access to those markets (only US) so I would still need to have other brokerage accounts. And I find that the moomoo app has a lot more utility than the thinkorswim mobile app and it offers all the markets I am interested in. So moomoo wins on the convenience and utility factors.

Some may compare to Tiger Brokers who has also offered $0 commission for US trading recently. But it has imposed more conditions. For example, you have to invite friends to open an account and make a deposit of S$100. This applies to eligible customers. Moreover, the platform fees of US$0.005 per share or minimum US$1 per order have to be paid. Comparatively, Futu SG’s (moomoo) deal is much better.

Last comparison is with Syfe, which recently launched Syfe Trade that offers 5 free trades each month for the first 3 months. Thereafter it is reduced to 2 free trades per month. This is sufficient if you don’t place many trades per month, but the quota isn’t quite enough for an active trader.

Of course, these offerings are bound to change as competitors make adjustments to the business landscape. For now, Futu SG (moomoo) is in the lead for $0 commission US trading.

How much can Traders save?

I run a short-term momentum trading strategy which requires weekly trades to be done. It averages about 4 trades per week – 2 buys and 2 sells.

This strategy for trading small amounts of capital was not possible using brokers that charge market rate commissions, because the commissions would eat up the profits.

For example, the normal US trading commission of a minimum US$25 per trade (actually higher than this because of GST and other fees) would cost US$100 per week or US$5,200 (S$7,069) a year!

If the trader uses a capital of US$10,000 to trade this strategy, he needs to generate 52% return a year just to recover the commissions! This is what makes short term trading impossible.

But with the discount brokers today, short term trading is very much viable. And with Futu SG’s (moomoo) zero commission, our momentum traders can save thousands of dollars a year and keep them as profits.

The savings would be even more significant if you are a day trader or a swing trader who places more frequent trades. Do the sums and see the difference for yourself!

Good for Dollar Cost Averaging too

Another group that can benefit from Futu SG’s (moomoo) $0 commission are those who do regular investments. This is especially true for smaller investment amounts which are sensitive to costs.

For example, someone who could save US$100 a month may not find it worthwhile to buy a stock when the commission is US$25. That’s 25% eaten away by commissions even before the capital gets to work in the markets!

Even with the low commission fee of US$2, the cost will still take away 2% of the US$100, rendering regular stock buying insensible.

But with $0 commission now, the cost is no longer a barrier, and it is now possible to buy as and when the capital is available or whenever the share price offers a good opportunity. It gives a lot more flexibility to the investor and dollar cost averaging becomes more effective.

Is there a catch?

Some might wonder if they are the product, as nothing can be free in this world.

I used to think that way too and that $0 commission comes with the price of having the order flow being sold to high frequency trading firms. Over time, I think that is not a big issue for the majority of the investors. We are not talking about trading millions of dollars, so the impact isn’t great. And who says that a broker who charges commissions won’t sell your order flow? So, my thinking now is to save as much as possible when it comes to fees.

Commission-free trading continues to be popular and will be the direction which the markets would eventually gravitate to.

Get your commission free trading today

For eligible Futu SG (moomoo) clients, you automatically enjoy the $0 commission US trading forever and the $0 platform fee between 13 Apr 2022 and 12 Apr 2023. You just need to say Thank You!

For new Futu SG (moomoo) clients, you enjoy the $0 platform fee for a year from the day your account is opened.

But of course, you will get a lot more freebies as a new client. The most attractive one would be 1 free share that is worth between S$20 to S$1,000 (if you deposit the equivalent of S$2,700 into the account and maintain it for 30 days). You can spin the wheel and see where your luck brings you to.

Sign up for an account here!

This article is brought to you by Futu Singapore Pte. Ltd. The views expressed belong to the author. This article has not been reviewed by the Monetary Authority of Singapore.