Commissions and Fees for stocks, futures, stock options, options on futures

Discussion in 'Trading' started by Optional, Mar 11, 2009.

  1. the question is best posed to a large cross section of you folks, specifically those who have been trading for a looooooong time.

    With the ubiquity of electronic trading, it makes sense that commissions and fees have fallen drastically over the course of your trading career.
    Is this true?

    What were commissions and fees on your average futures contract in 1975?

    How about in 1985?

    Did the price only start to fall in 1995 with the daytrading boom?

    Is the price so low now, and thus the vig is reduced so heavily, that you actually have a statistically BETTER chance of winning NOW, than you did back then?
  2. Commissions do not improve your "chance" of winning or losing. It is possible to model a trading style for instance scalping, to take advantage of lower trade costs. But lower costs alone do not make a trader more likely or unlikely to be profitable. A closed trade still requires trade selection, and two executions and two fills, manual or automated.

    Yes, trade costs have come down substantially, but so too has the granularity of instrument trade increments, thus giving a trader more granular entry and exit points. Equities used to trade in 1/8 (12.5 cent) increments. Equities now trade in pennies. Some futures, such as NQ used to trade in .50 increments. Now NQ trades in .25 increments. Some debt used to trade in 1/32 (.03125). Now some debt trades in 1/64 (.015625) increments.

    Regardless of the decade, profitability is determined on how well you select, execute and fill.

    Once unthinkable, now unstoppable
  3. vjay


    I'd say that for an average retail trader the commissions for a round trip was $50 for both years
  4. 1) The drop in commissions has to do with technological advancement, not the reduction of excessive profit margins.
    2) The increase in trading volume also brought about economies of scale.
    3) Yes. It's better to place orders electronically instead of using the telephone.
    4) Lowered commissions can make a "marginal" system profitable.
    5) Reduced tick sizes are "good" for customers, "less good" for market makers and specialists. :cool:
  5. Optional,

    I paid $19 R/T back in '06 and pay $9 R/T today. I'm serviced VERY WELL, so I don't care that it's not a few bucks cheaper. I'm not a scalper, but a classic Support & Resistance trader.

    The nice part about today's trade is that it's ALL ELECTRONIC & MORE LIQUID. Less slippage is nice as slippage in my opinion, is a greater "thief" than anything else.

    Best wishes!