commissions as % of profit

Discussion in 'Professional Trading' started by Kicking, Apr 11, 2004.

  1. That's a statistics you hardly hear about. How much commissions do you pay as a percentage of your gross P/L? Or how much commission dollar do you spend per dollar of profit before commissions. I hate to see my monthly gross P/L cut down dramatically by transaction costs
     
  2. MR.NBBO

    MR.NBBO

    36% -Equities trading. :(
     
  3. Day trading account, 30-50%. Long term trading account, about 3%.

    The only thing that matters though is the bottom line. A high volume strategy will be commission intensive, but give you lots and lots of opportunities to apply your edge and might net you a lot more than than infrequent trading with virtually no commissions.
     
  4. this tells you how important commissions are... a decrease from .006 to .003 in reality will increase my % profit per commission rate from 33% to 233% (assuming the following variables)

    Let's suppose I trade 50,000 shares a day and I gross 400 per day.

    Before
    Rate = .006/share nyse
    Commissions = $300
    Gross = $400
    Net Profit = $100
    % profits of commissions = 100/300 = 33%

    Now
    Rate = .003/share nyse
    Commissions = $150
    Gross = $400
    Net Profit = $350
    % profits of commissions = 350/150 = 233%

    I know how important commissions are but I never realized exactly HOW important it was. I think of this as my own business and I must do EVERYTHING to keep my costs of operations down. Anyways I think traders should take advantage of the coming times and the crashing of rates.
     
  5. The original question was "How much commissions do you pay as a percentage of your gross P/L?"

    If you pay $300 in commish for $400 gross, that's 75%. And paying 150 to make 400= 38% But your point is well taken for someone trading a lot relative to what they make. And trading IS a business. To take home more you either have to cut expenses or generate more revenue, just like any business. Commissions are often your largest expense.
     
  6. In this kinda market? My commissions are at the historical low, roughly 3-5% comparing to 30% to 40% high.
     
  7. Its funny the broker gets to keep 25%-50% of my money after he pays HIS expenses...maybe more.

    I guess we all are entitled to a profit. I worry about abuse and getting value for my money, which is also a valid consideration. I will end with this question.

    Are you getting your moneys worth?

    Michael B.
     
  8. bro59

    bro59

    Really I can't imagine we're getting value here. The risk for these brokers pales in comparison to futures trades, yet as a % of underlying merchandise moved equity traders pay a huge amount in commission. As annoyed as I get at the commish game and paying so much I'm quite happy to be on the side I'm on, which is to say the beneficiary of lower rates. Unless we get even more consolidation in the industry, and even if we do, I think equity rates are headed much lower. Technology makes clearing very cheap, and there really is no value-added in charts, scanners, etc. To answer the thread' question: 50% last year, less this year.
     
  9. 44%
     
  10. Epsilon

    Epsilon

    Jesus people, how much are you paying. I am currently paying 0.0015

    It's about 10% or less
     
    #10     Apr 12, 2004