Scotia iTrade was the first online brokerage to offer commission-free ETF trading and now Canadian Couch Potato reports that Qtrade is offering commission-free ETF trades as well. Saving money on commissions this way is a good thing, but it can mask problems.
I find trading similar to drinking: they’re both fun, make me feel good, and cost me money. I try not to be too anxious to get duty-free booze at the border. I have no problem with saving money, but I worry that if cheaper bottles of booze makes a significant difference to my finances, maybe I’m drinking too much.
Getting back to ETF trading, it’s better to pay nothing than something, but if you’re really saving a lot of money with free ETF trading, maybe you’re trading too much.
There are other hidden costs of trading that are less apparent than commissions. You pay half the spread on each transaction and you pay for trading against better-informed investors, some of whom have inside information (or at least information you don’t have).
So, go for the free ETF trading if the available ETFs fit your investment plans, but remember that your investing strategy is more important than a few dollars for commissions. Don’t let the tail wag the dog.