Commissions adds up in the long run

Discussion in 'Trading' started by shortbleu, Sep 1, 2011.

  1. After doing 5-10 rounds trips a day on the ES (or another future contract) as a small retail day trader paying retail commission, I realised commission was breaking my account.

    Say you pay $4.5 RT on ES as a small retail trader.
    You have a $10,000 account and trade only 1 lot per clip.

    10 RTs per day at $4.5/RT are $45/day, almost 4 ticks or 1 ES point. It takes very good trading skills to make over 4 ticks per day on average just to cover the commission, hence I changed my trading style, I do only 1 trade a day now and my profit after comission improved.

    I used to pay $45/day * approx 230 days I trade in a year = $10,350 !!!

    i.e. I needed to double my money on a year just to break even, that was ludicrous.

    Still with 1 trade a day, it costs me just over 10% of my trading account over a year, that's still a very significant percentage of the account but can be done more easily.

    What percentage of your trading account do you pay in commsission in a year? If you're a retail day trader, most would pay 10-100%. Do you find it easy to beat the commission?
  2. .
  3. spd


  4. you should never be afraid of entering a profitable trade because of the commission cost. why avoid an expected return of 10$ to save 4$? i'm a professional and have a roundtrip cost of 32 cents/contract of treasury futures and average somewhere around 1/3%/day in transaction costs.
  5. the smartest folks in the room are watching YOU trade and charging you the commission.

    you just figured this out?
  6. The higher the commission the better you trade. You're going to cherry pick your best/highest probability. Interesting concept? :)
  7. If you were given a choice, based on your analysis, would you be a trader or would you be a broker?
  8. But he is a ahead of a lot of people.
  9. marceck


    Trade ZN. $1.43 at IB per.
  10. You need to complete your analysis: add the bid-ask spread?

    Please do it, and report the results. Good work!
    #10     Sep 1, 2011