call me crazy but i don't think mike has a bad rate. i think maybe he could get 1/20 per share less but its not a bad rate. i think bad rates are when you could get 3/10 less per share somewhere. the best defense for not giving people better rates are saying you pay higher rates. i don't think a firm has to tell you there cost but they do play on your loyally when you are going to leave. i think loyally is a 2 way street and how much of a right should one person have to get fat off another person making a basic living at the end of the day.
Well, even outside of trading, the trend is always lower cost and better service. Thats how we compete. So the long term trend in this business is lower rates, and better service. Technology has gone a long, long way in the last 6 years and rates are down by multiples. I don't hear many traders complaining that speed, reliability and service are WORSE than in 1999. At the same time, it costs much much less to clear. So.....it all has to start somewhere........ When the first firm can cut their rates and maintain great service, unless other firms evolve quickly, that first firm dominates. We don't have one firm precisely because other firms are willing to figure it out and compete. If you cut rates, but operate your business poorly, then you can't compete cause in the long run you lose customers. I am not talking about trading through these firms, obviously. I am talking about the firms that find a way to add value and lower cost at the same time. Refer to the thread of GM (General Motors) demise. Why do you think they are losing money? Well, they stopped producing a large percentage of cars, and produce mostly SUVs. At least now, SUV sales are plummeting, GM doesn't produce a value added product right now. This business model worked well when all the suburban housewives could convince Hubby that they all "needed" an H2 to drive little Johnny to school. That was before the breadwinner observed the increase in gas prices. For those of us who don't feel a pinch with prices, of course this won't apply, but for the masses in the US, it does apply. While this may be short term, the market dictates the result without ambiquity. Sure, you could say,"Well, I pay more to drive an SUV becuase is the biggest thing on the road, and I value safety." Nobody says you are wrong, but for GM now, its a losing way to conduct their business. And to move from point a to point b, as the price in gas trends upward, some might argue you pay a premium over what you really need.
Getwhatyoudeserve, you seem to have too much time on your hands. I have read your long winded posts, and while you do make a compelling theoretical argument, the fact is, my real world trading results support my case. It is the difference between getting good vs great results in trading, in my humble opinion! Let's take this from a theoretical debate, to real world, money on the line trading. Where I trade has the best technology "back end" in the business. This makes me money every day, alot of money. Why is this important? Because every other place that offered a "bargain" rate, didn't have the reliable systems to support my automation.( I spent 6 months researching and trading at other shops, the last one didn't even return all of my capital!) Secondly, to trade a system requires capital, to trade multiple systems, requires even more capital. I am able to fund my business with 1/20 of the capital that would normally be required to run these system. That free's up more capital to pursue other investments( I sweep trading profits out of my account every month). I have 3 seperate accounts, one for day trading, one for swing trading/ position trading, and one that trades futures. Everyone of these accounts has a postive expectaion at the end of the month. My only limitation thus far has been having too many trading ideas and not enough capital. I estimate that my current cost of capital is around 15%. When you factor in all of this, you'll realize that getting the best deal is not quite as important as getting the right deal. If you're focused on pennies you'll make pennies, if you focus on dollars you'll make dollars. All the best, Mike
*Clap Clap Clap Clap* "If you're focused on pennies you'll make pennies, if you focus on dollars you'll make dollars. "
Thanks guys, I appreciate all the energy you put into my ideas. That is quite a compliment, and further fuels my limitless mind, in limitless time. All the best.
I agree except for the part about the "best back end in the business" - as you know, technology is now a simple commodity, and there is very little difference these days...a "leapfrog" effect has taken place in the past, but now it's like watching a cable TV, it either works or it doesn't. As long as you have FIX protocol and and back door direct port (as they put it), you're pretty much there....and software is software...pretty much "shareware" these days. The good traders (yes, like you Mike), will use technology to make money, and adapt as things change. All the best, Don
Agreed, and since technology is so qualitatively homogenous, it makes sense to pay less for the same product. But, some people compare apples to oranges, and are always right. Mschey, the trend is that most "back-ends" will continue to improve, and cost less to use. I only hope, for your sake, that you continue to use the best one, and at the lowest cost. Its great that you have lots of buying power, three accounts, and trade at the same level while sweeping your profits out of your accounts. But that is nothing that most firms at that same level cannot do. Its great that you have a firm that can handle your particular need for automation, but its not rocket science, and its likely that costs continue to drop for that sort of service as well. And I bet there are a few firms that do all that you need and at the same time seek to lower their costs, you might consider keeping your eyes open. I am sure you will, even if you won't admit to it here. .