A broker or a brokerage account can be a trader’s best friend. Many consider having a brokerage account compulsory to trade. A trader chooses a brokerage account that suits his trading style and goals. If you look in the market, you will find many brokerage firms offering different types of accounts. They even tempt traders by offering them features like trading tools that are user-friendly, mobile trading services, text or email notification, lower brokerage fees, and many more.
It becomes a problem when you do not get what you want in a single brokerage account. Also, when you see so many potential brokers and cannot decide to choose one.
Can You Have Two Brokerage Accounts?
Yes, you can have two brokerage accounts. For example, some traders separate long-term trades in one account and short-term trades in the second account. However, brokers don’t allow you to have multiple registration accounts with a different login email but numerous trading accounts with the same username.
Can you have multiple brokerage accounts?
Yes, you can have multiple brokerage accounts. Traders use separate accounts to trade different assets (forex, stocks, etc.) or trade long-term trades in one account and short-term trades in the second account. Usually, traders open several trading accounts using the same email address at a preferred broker.
Is it wrong to have multiple brokerage accounts?
No, it is not wrong to have multiple brokerage accounts. There is no such law that forbids anyone from having more than one brokerage account. Of course, some traders in US open multiple accounts to avoid FIFO rules and use hedging opportunities. This practice is not forbidden.
How many brokerage accounts can I have?
You can have an unlimited number of brokerage accounts. However, some brokers have limitations in the number of accounts (10 accounts or 100, etc.) that clients can open, but it is a rare practice. Brokers encourage traders to have multiple accounts and trade often so they will have a more significant commission.
It is advisable to have one brokerage account that handles all your investments and funds. But trying your hands at multiple accounts can also be beneficial in many ways.
Let’s look at some of the points you can consider about both options: having a single brokerage account or multiple brokerage accounts.
Benefits of Having Multiple Brokerage Accounts
Many ways are having more than one brokerage account could be beneficial to you. Of course, you can always opt for having just one account, but you must know which option suits you the best. Following are some benefits that you will get from having more than just one brokerage account.
- Trade Assets with Higher Risks- Many assets come with higher risks than other assets in the market. For example, forex and cryptocurrency. These assets are risky because they are illegal in some countries and may not have a regulatory body to clear any malpractices. These are the reasons many firms do not offer trading services in these types of assets. So, look for the firms that provide services in trading these risky assets. Also, you may want to separate your other trading accounts from the accounts that help you trade these high-risk assets. This is simply because having these accounts with the same brokerage firm may also affect your other investments.
- Get the Benefits of More than One Expert- Many firms in the market offer almost all the services in different asset classes. For example, Bonds, Stocks, ETFs, CFDs, Mutual Funds, and many more. These firms might be offering services in all the available asset classes, but they may be experts at only one or two classes and mediocre at others. So, if you want to take advantage of the experts, try to split your investments into different firms according to their expertise.
For example – you would want to have a brokerage account with a firm that offers excellent services for trading instead of a firm that is an expert in mutual funds. Similarly, you open your IRA with a firm that has a history of offering better retirement plans than others in the industry.
- Disperse Your Investments with Different Brokerage Firms- There is a limit of $500,000 set by the Securities Industry Protection Corporation (SIPC). This is the limit to which the SIPC protects a trader who incurs a loss at one of the brokerage firms members of SIPC. Half of this limit can be taken in cash. This is why many traders create different accounts with a lot of investment funds, each staying below $5 Million.
However, certain conditions are necessary for you to be eligible to get covered under SIPC. Some of these conditions are:
- You must have your IRA and taxable trading account with the same brokerage firm.
- The brokerage firm you had your accounts in must have incurred losses or have gone bankrupt and must be a member firm of the SIPC.
- The trader must have invested over $500,000 to get it covered by SIPC. Thus, the SIPC protects less than 5% of your total investment at the fallen firm.
- Another essential condition is that your investment funds with the fallen firm must be kept with the DTC under the firm’s name. These funds must be separated from the actual assets of the brokerage firm.
Now that we know what benefits a trader can get from having multiple brokerage accounts let’s look at the other way round.
Benefits of Having a Single Brokerage Account
Having your trading account with just a brokerage firm has its benefits over having multiple accounts. It becomes hassle-free to take care of too many things simultaneously, and the risk involved is also limited to some extent. But, it must align with your goals.
- Access your Consolidated Investment Spread over Different Assets- You can have your brokerage account with only one firm that offers brokerage service in different assets. You can choose a firm that can help you display all your investments in other assets like stocks, bonds, IRA, and ETFs on a single platform. This enables you to keep a record of all your investments without even getting to do extra paperwork; however, in the case of multiple brokerage accounts, you have to first gather information from each of your brokerage accounts and then consolidate them to calculate your investments.
- Get Benefits of being a Premium Customer- Any firm dealing in customer service wants to retain their customer and add new customers to their list. For this, they offer their customers different perks like premium services to long-term customers. Similar is the case of brokerage firms. They provide the existing investors premium services if they bring in more investments; they invest in more assets with the same firm. These services may include reduced brokerage fees, free investment consultations, priority notifications on stocks, etc.
- Convenience in Keeping Track of Accounts- Having multiple brokerage accounts requires you to simultaneously keep track of every account. This may sound impossible, but there could be a time when you forget to keep track of one or two of these accounts to focus on a different account. As a result, you could miss some opportunity that may have arisen when you overlooked that account. This is not the case when you have a single brokerage account. With one brokerage account, you won’t have to be always on your feet to keep track of different versions and not miss out on the opportunities.
- Security- Whenever you open a brokerage account, you have to share your details with them. These details may include your account details, your employment status and income, your assets evaluation, and much more. Sharing these details with multiple firms and on various platforms makes it more prone to getting misused. Having only one account helps you secure your information in the hands of a single identity whom you can trust. Hence, more security to your investments and your personal information.
Can you own the same stock in two different accounts?
Yes, you can own the same stock in two different accounts. In addition, you can open multiple trading accounts at the same broker, as well as at several other brokers. Brokers encourage traders to have multiple accounts and trade often so they will have a more significant commission.
Should you have multiple brokerage accounts?
Yes, you should have multiple brokerage accounts if you have enough capital. For example, it is common to have at least $5000 for forex trading or at least $25000 for stock trading. You can trade each type of asset in a separate account or use one account for long-term trading and one account for short trading.
Active and passive trader
Your trading pattern affects your choice of brokerage account. According to the classifications, you are either an active trader or a passive trader.
An active trader is someone more into day trading. These types of traders do not reap the rewards earned over a more extended period; instead, theyThey indulge in day trading, where they take advantage of slight price movements of stocks within a single day to over a week. Day traders prefer multiple brokerage accounts to take maximum advantage of these single-day price movements. Active traders also know how different assets can prove them full benefits with day trading. So, they look for brokerage firms that can keep with their needs and speed.
Passive traders are more interested in taking long shots. They want to invest in assets that give them higher profits in the long rSo theyThey invest in assets, retain them and earn mainly from the dividends. For passive traders, single brokerage accounts could be a better option. A single account will help them maintain the investment for a more extended period without requiring much of their efforts. However, if they want to invest in different assets, they can always choose multiple brokerage accounts.
Can I have multiple TD Ameritrade accounts?
Yes, you can have multiple TD Ameritrade accounts. You need to use one email address to log in to the Ameritrade platform (one registration account ), and then under one email address, you can have multiple trading accounts and link them all together.
Can you have two Robinhood accounts?
No, you can have only one Robinhood account. Currently, Robinhood allows one account per customer and per one Social Security Number. Robinhood has more than 18 million accounts, and it is challenging to manage a large number of accounts.
Can I have multiple brokerage accounts at Schwab?
Yes, you can have multiple trading accounts at Schwab, and for each account, you need to create a separate trading account application. Schwab allows you to use the same email and Social Security Number for your profile, and you can transfer cash and shares between accounts.
Both single and multiple brokerage accounts have their benefits and drawbacks. Although we have only discussed the benefits of having anyone of them, their weaknesses can be contemplated compared are both. In the end, it is up to the trader to choose from them and start trading towards the goal they have set.
Many brokerage firms can also advise on whether to have a single brokerage account or multiple. You can take the advice from the experts and select the account that aligns with your trading style, your investment plans, and your expectations.