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Pete:
You might find the trading standing on the floor is not for you--it is
entirely different than screen and phone trading--not better, not worse,
but different. And if you choose to go to a floor, there may soon be
than one way to get member's fees--Open outcry badges and member
electronic trading badges.
Personally, after trading both on and off the floor, I find trading
off-floor better for me. But I did come away with a much greater respect
for those that make a living day after day in the pits.
Best,
Tim Morge
HeyPeter wrote:
>
> Hey Scott
>
> Gotta agree with you on how critical transaction costs are to successful
> DAYTRADING. I have been daytrading for about 2 months, and am finding
> that even though my gross p/l is positive, when commission is taken into
> account the business becomes marginal.
>
> A while ago, it was mentioned here that the 90%losers/10%winners rule
> came about from some study at a brokerage house. In it they mentioned
> that although gross of transaction costs the accounts made money, after
> adding in commission, the profits were swamped and most (90%) LOST
> MONEY.
>
> In daytrading, this is gonna apply even more - that's why I am trying to
> get on the floor of an exchange where I pay a clearing fee of about $2,
> and no commish c.f. a retail rate of $20-$30 a round turn.
>
> I believe in the long run $20 commish is unsustainable for most people
> trying to daytrade and pick the bones out of smaller price swings
> intraday, assuming you are reasonably active. (And I haven't even
> mentioned slippage yet . . .)
>
> >From where I am standing, the only group getting rich from daytrading
> are the brokers.
>
> If you want to daytrade for a living and to give yourself the best
> chance of success then you must,
>
> GET YOUR TRANSACTION COSTS AS LOW AS YOU POSSIBLY CAN . . .
>
> (Alternatively, ask yourself at what commission rate would your
> daytrading business stop becoming marginal. If you cannot get such a
> low commission rate from your broker then don't daytrade!)
>
> Penny-wise (hopefully pound-wise too ;-) Pete
>
> Scott Hoffman wrote:
> >
> > When I daytraded the NYFE back in 1997, I found that although my strategy
> > had a 25% edge (think 62.5% win, 1:1 payoff) *before slip/comm* after
> > slip/comm it was a breakeven deal at best. And that's not counting datafeed
> > / hardware costs. Articles like this never really give the true impression
> > of just how difficult it is to consistantly make money daytrading. The
> > transaction cost barrier is the killer. Maybe the barrier in the equities
> > world has dropped so dramatically that it may actually be feasible. On the
> > other hand, I posted an article from the WSJ a few months ago about Block
> > Trading's (a daytrading outfit where you go to there office, use there
> > equipment, pay them a fee) demise indicating *not one* of their clients made
> > money. Be sure to be skeptical of casual statements of profitability.
> > Anybody can say anything. And our human nature is that the more we *want*
> > something to be true, the less objective - or should I say "the more
> > foolish" - we become in judging truth from fraud.
> >
> > Scott Hoffman
> > Issaquah, WA
> >
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