costs of doing business

Discussion in 'Professional Trading' started by metroman, Sep 16, 2009.

  1. metroman


    Good morning, I admit that I have been paper trading ES for over a year. I am retired and I have income necessary to sustain life. I am preparing a business plan in an effort to determine wheter this endeavor is even feasible. I need some help with the costs involved.

    If an ES point is worth $50.00 what are the costs and how much are they? Commissions, data feed, taxes, chart fees. What am I missing?

    I find the forums very helpful and I am looking forward to your responses
  2. stick to simulator until you're ready

    then other costs will become irrelevant

    otherwise, other costs will still be irrelevant next to your losses
  3. race car drivers complaining about how much gas costs....
  4. If you trade through IB commissions for ES are 4.80 per RT. There are no data fees if you do a minimal amount of trading each month (check the website for details). I use IB's charts and also Quotetracker, both free, although free QT requires having an account with Ameritrade I think. Taxes on capital gains from futures trading are 60% at the LT rate, 40% at the ST rate.

    Best of luck.
  5. Illum


    You give up a tick going in and a tick going out, that is a another cost
  6. kxvid


    You main costs will be the spread. The spread on ES contracts is enormous.
  7. metroman


    By spread do you mean the slippage between the posted bid/ask and the actual bis/ask the contract is traded at?
  8. No. You pay retail. The House pays wholesale. Bid at x, Sell at y.

    Slippage is that the price moved beyond what you expected, such as a market order in a market contrary to the direction you want to go. There is negative and positive slippage, such as with limit orders. But the price you pay for limit orders, is not getting in on some trades that may be very profitable.

    Other costs: RISK (trading is about Risk-Adjusted Reward). Most newbies do not grasp the dangers, such as the inevitable Risk of Ruin. This is not the same thing as buying a coporate bond at 7% for 30 years. It is about "the more you leverage or higher returns you seek, the higher your chance of complete blowout and possible bankruptcy.
  9. How do you define "enormous"? It's actually very tiny. :)
  10. Did you used to be a CPA? Focus on developing a method/system that you feel comfortable trading. That will take care of your revenue. The fees/costs will take care of themselves too. :)
    #10     Sep 18, 2009