Why trading is easy

Discussion in 'Trading' started by jwecme, Nov 24, 2006.

  1. jwecme

    jwecme

    Not true as every trade incurs comission and exchange fee costs. Unless you can exactly match the price of a one tick profit or the smallest increment with the entire cost of opening and closing the transaction a break even is not possible. I cannot think of a contract where this is so.
     
    #21     Nov 25, 2006
  2. "Simple" not "easy".


    D.
    MPx
     
    #22     Nov 25, 2006
  3. "Not true as every trade incurs comission and exchange fee costs. Unless you can exactly match the price of a one tick profit or the smallest increment with the entire cost of opening and closing the transaction a break even is not possible. I cannot think of a contract where this is so."

    it is entirely possible.

    example.

    100 shares of ABCD I buy at $10 a share.

    cost 1,001 ($1 commission with IB)
    the price goes all over the place, but i eventually sell at 10.02 a share.

    i sell for 10.02, which is $1002.00

    IB takes out 1 for commission, and I received 1001 after expenses for the sale, which is a BREAKEVEN trade

    exactly.

    so, let's stop playing the silly semantical games. an EXACT breakeven is possible, and it is not just possible, I have had trades which were exactly breakeven

    exactly.

    we all know that most traders are gonna consider any small profit or loss, a scracth (essentiallybreakeven but not precisely) but if we wanna get precise, the above trade is/was breakeven and these do happen.

    now, in futures, it would be very difficult to get an exact breakeven, since my commssion is (it depends since i use unbundled commission), but is about 1.98 or so.

    since, the dow mini is $5 a point, you can see that it's hard to get a multiple of 1.98 to match a multiple of $5.

    but it is true that there are THREE trade outcomes - scratch (breakeven), win, or loss.

    and of course one can further define gradations of the latter two

    but it is also true that the three are qualitiatively different, and thus the OP is correct to state there are 3 outcomes possible, because there are
     
    #23     Nov 25, 2006