Must-read before investing in stocks: 2025 trading fee details and break-even point analysis

The Truth About Trading Costs That Investors Easily Overlook

Many novice investors believe that profits come solely from stock price increases, ignoring the hidden costs behind them. In fact, stock trading fees are far more than just commissions; they include transaction taxes, system fees, currency conversion costs, and multiple layers of expenses. To truly avoid losing money, you must first understand the composition of these costs.

Taiwan Stock Trading: Cost Calculation and Break-Even Threshold

Main Cost Structure of Taiwan Stock Trading

When trading stocks in Taiwan, investors pay two main types of fees: broker commissions and government transaction taxes. The commission is calculated at 0.1425% of the transaction amount, but most local brokers offer discounts of 50–60%. Transaction tax is only charged on sales, at a rate of 0.30%.

The expenditure formula for buying stocks is: Commission = Stock Price × Quantity × 0.1425% × Discount Factor

The expenditure formula for selling stocks is: Commission + Transaction Tax = (Stock Price × Quantity × 0.1425% × Discount Factor) + (Stock Price × Quantity × 0.30%)

Example Calculation: For Master Kong (910322.TW)

Suppose you buy 1 lot of Master Kong at NT$200 per share, with a broker discount of 60%:

• Buying commission: 200 × 1,000 × 0.1425% × 0.6 = NT$171
• Selling commission: 200 × 1,000 × 0.1425% × 0.6 = NT$171
• Selling transaction tax: 200 × 1,000 × 0.30% = NT$600
• Total trading cost: NT$171 + NT$171 + NT$600 = NT$942

This means the stock must rise by at least NT$942 (or 0.47%) to break even.

Comparison of Major Taiwanese Broker Fees and Recommendations

Different brokers offer varying discount levels, and the number of branches also affects service convenience:

Investors should choose brokers based on their usual trading method (零股 or full lots) and trading frequency to maximize discounts.

US Stock Trading: Cost Differences Between Prime Broker and Overseas Brokers

Cost Structure of Prime Broker Channels

When trading US stocks via local brokers’ prime brokerage services, investors pay commissions of 0.25%–1% (depending on the broker), plus additional costs such as a 0.00278% sales tax, US$3 system service fee per trade, ADR custody fees, etc. Prime brokers also have a “minimum commission” threshold, charging a minimum fee regardless of trade size.

For example, Yuanta’s prime brokerage:

• Manual order commission: 1%, minimum US$50
• Electronic order commission: 0.5%–1%, minimum US$35
• Additional costs: 0.00278% sales tax, US$3 system fee per trade, US$15 international remittance fee

Overview of Major Prime Brokerage Fees

Advantages of Using Overseas Brokers Directly

Many overseas brokers have eliminated stock trading commissions, saving retail investors with small amounts significant fees. However, they often charge around US$30 for deposits and withdrawals, which should be considered.

Recommended Chinese-Support Overseas Brokers

Interactive Brokers: The world’s largest online broker, founded in 1978, offering access to major global markets. Fees are fixed at US$0.005 per share or tiered. Drawbacks include a complex platform and a US$10 withdrawal fee.

Mitrade: Offers CFD and stock trading, with a low minimum deposit of US$50, supports TWD deposits/withdrawals, and has no trading commissions. Suitable for investors seeking lower capital thresholds.

Onada: No minimum deposit, 0.1% commission, over 800 US stocks available, with leverage up to 888x.

Firstrade: Provides 24-hour Chinese customer service, no commissions, US$25 withdrawal fee, with localized services.

Cost Considerations for Short-Term Traders: When to Choose CFDs

High-Frequency Trading Cost Challenges

For intraday or short-term traders, every trade incurs commissions whether via prime brokers or overseas brokers. Frequent trading accumulates costs rapidly, potentially eroding profits.

Cost Advantages of CFD Trading

CFD (Contract for Difference) is a trading instrument that profits from price differences without owning the underlying stock. The main costs are the spread and overnight financing; no commissions, transaction taxes, or deposit/withdrawal fees are charged. For frequent traders, costs can be reduced by over 50%.

Stock Trading Fee Calculation Table: Master All Influencing Factors

Four Major Variables Affecting Fees

Market Differences: Different exchanges have varying fee caps and rules, which are periodically adjusted. Taiwan and US markets have entirely different fee structures; investors must understand each separately.

Broker Choice Impact: Large full-service brokers usually charge higher commissions but offer more tools and research. Smaller brokers often offer discounts to gain market share. Rates may also change over time within the same broker.

Trade Size: Fees are percentage-based; larger trades incur higher absolute costs. Some brokers offer discounts for big accounts or switch to fixed fees.

Trading Frequency: Each buy and sell incurs two fees, so frequent trading leads to rapid cost accumulation. High-volume monthly traders may qualify for discounts.

Common Investor FAQs

Q1: What items are included in the full cost of Taiwan stock trading?

A1: Mainly broker commissions (about 0.1425% of transaction amount, often discounted to 50–60%) and government transaction tax (0.3% on sales). Commissions are charged on both buy and sell; tax only on sales.

Q2: How to determine when to sell a stock without losing money?

A2: Calculate the total costs of buying and selling; the stock’s price increase must exceed this amount to break even. Using the Master Kong example, a rise of over NT$0.47 (0.47%) is needed. Relying solely on percentage gain can be misleading.

Q3: Which has lower trading costs—Taiwan stocks or US stocks?

A3: Generally, Taiwan stocks have a simpler fee structure but higher transaction taxes. US stocks via overseas brokers have no trading commissions but may have deposit/withdrawal costs. For short-term trading, consider CFDs.

Q4: Which broker should a beginner choose?

A4: Depends on trading habits. For full lots, choose brokers with the lowest commissions; for odd lots, verify their minimum fee policies.

Q5: What are the practical differences between prime brokerage and direct US stock accounts?

A5: Prime brokerage involves about 1% commission plus additional fees, suitable for small capital. Direct accounts have no commissions but incur deposit/withdrawal costs, better for larger, long-term investments.

Practical Tips to Reduce Trading Costs

Rationally planning your trading strategy is the first step to controlling costs. Before opening an account, compare broker rates and promotions carefully. Choose the platform best suited to your trading frequency and capital. For short-term traders, evaluate the cost advantages of CFDs thoroughly. Always calculate your break-even point before each trade to avoid losses caused by overlooked fees.