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Beware of very low commissions....the FILL is the most
important part..............think of the difference in 2 or 3
ticks....
do the math...you'll see what I mean.
Frank
Frank Cerrone
cerrone@xxxxxxxxxxx
> -----Original Message-----
> From: HeyPeter [mailto:heypeter@xxxxxxxxxxxxxx]
> Sent: Wednesday, November 25, 1998 1:37 AM
> To: Scott Hoffman
> Cc: omega-list@xxxxxxxxxx
> Subject: Re: Daytrading article in WSJ
>
>
> 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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