An active account is one with frequent transactions, often associated with brokerage, checking, or debit accounts. Brokers offer incentives such as reduced commissions, free trades, and educational resources to encourage active trading, which generates income for the provider. Advanced charting programs and technical analysis skills can also lead to increased trading volume. The goal is to have active and successful account holders, which benefits all parties involved.
An active account refers to an open account with frequent transactions. The primary use of the term refers to brokerage accounts. Active account status may also be associated with checking or debit accounts that have regular transactions. Activity on an open account generally generates income for the provider.
Online brokerage accounts require activity for the broker to earn income. This is accomplished by the account holder by making trades. Brokers earn income by charging commission fees. The main concern of the broker is to promote a large volume of operations. Some brokers charge an inactivity fee, because an inactive account does not provide income for the broker.
Brokers may offer incentives to account holders who have high activity. Reduced commissions are a typical incentive for increased activity. Some brokers offer free trades and assorted giveaways. These incentives are often offered to merchants who open a new account. Account referrals can be another popular incentive offered by brokers.
Many financial brokers focus on educational resources as an incentive for account holders. The reasoning is that an educated trader is more likely to be a productive trader. An educated trader will feel more confident and will naturally produce more trades and more commissions for the broker. These resources work to the benefit of the broker and the trader.
Brokers can provide software programs for a trader who has an active account. Advanced charting programs can be an attractive feature for the active trader. Good charting programs lead to technical analysis skills. These skills can lead to trading systems and procedures that generate volume transactions for the broker. Some programs may include proprietary technical indicators.
Many brokers will provide whatever is necessary to motivate the account holder. Special news and reports can be offered free of charge to an account holder with a specified trading volume. Some incentives can be quite expensive for the broker, because a third-party provider may supply the services. In general, trading commission volume is expected to cover the cost of services plus a profit to the broker. Some brokers may even provide proprietary trading systems.
The scope of services and incentives provided by brokers are aimed at propagating active trading accounts. It is in the best interest of the broker to have active and successful account holders. The investor with an active account has access to many services and resources that can enhance and enhance trading skills. Active trading accounts often prove to be a profitable venture for all parties involved.
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