0 Commission vs Commission discussion

W

WCOMtrader

This is a poll in response to this thread

http://www.elitetrader.com/vb/showthread.php?s=&threadid=23157

on the discussion of 0 commission low payout vs some commission high payout.

the spreadsheet that helps you decide which is better for you is here. Plug your own numbers in there, but leave, for the sake of the last thread, the payout for 0 commission at 30%

http://www.elitetrader.com/vb/showthread.php?s=&pstid=347658#post347658

Please vote on which payout structure would suit you best. Please vote only after you have checked the spreadsheet, I will not vote.

Also, please post here your findings. I am also interested in people's break even ratio's vs actual ratios.
Let all of us prop traders use this tread as a good research tool.

Moreover, if you are a loosing prop trader - look to see whether you can actually make money if you're not paying commision

Those who are not familiar with some terms in the spreadsheet, feel free to ask in the board - so there will be a good FAQ, if necessery.
 
For the guys that have voted for their commish and payout:

Can you post here at what payout would 0 commission make sense (i.e. better than what you have now?)

I think that this is a more important question!
 
I think there is a problem with the link above. The spreadsheet can be found here.

Let me remind you guys, it is a very powerfull tool when deciding between payouts/commissions.
 

Attachments

say at least 40% and that includes free bullets too. then again nasdaq scalping is not what i do, so even if its >40% i will pass.
 
Very simple answer (again, I won't vote), and BT does still have a few "leftovers" from a failed experiment sharing profits.

If you plan on making money, then keep all the profits. If you think you're not going make money, then choose the no cash down, small payout...since it will all be academic anyway, you won't be around long if you don't "perform" right away.

One thing that continues to amaze me is that some people actually think that BT (that's the only firm I can speak for, of course)....is staid, or that deals are "cut in stone." We can do whatever we like, we are a solid firm, exchange members since 1978...we can trade what we like, and make the deals that we like.

As with any successful firm, we have a few disgruntled "naysayers" but I'm sure, fewer than most...
That being said, we like the deals that make sense to both parties. A "one sided" deal will be of no benefit to anyone. As in any business, only the strong survive (and I mean the traders and the firms). Sometimes this board reminds me of the middle East with people throwing rocks at each other over ridiculous things.

Anyone that wants a career in trading can attempt it, and choose whatever "plan" they like...it's unforunate that many make lifelong decisions based on their current situation.

Don't fall for the trap of thinking you're going to make a lot of money right away, even at 100% payout. And if I know that to be true, then how can you think of "quick profits" with 30% payout or some other variation thereof.

Peace!

Don
 
Quote from Don Bright:

Very simple answer (again, I won't vote), and BT does still have a few "leftovers" from a failed experiment sharing profits.

If you plan on making money, then keep all the profits. If you think you're not going make money, then choose the no cash down, small payout...since it will all be academic anyway, you won't be around long if you don't "perform" right away.

One thing that continues to amaze me is that some people actually think that BT (that's the only firm I can speak for, of course)....is staid, or that deals are "cut in stone." We can do whatever we like, we are a solid firm, exchange members since 1978...we can trade what we like, and make the deals that we like.

As with any successful firm, we have a few disgruntled "naysayers" but I'm sure, fewer than most...
That being said, we like the deals that make sense to both parties. A "one sided" deal will be of no benefit to anyone. As in any business, only the strong survive (and I mean the traders and the firms). Sometimes this board reminds me of the middle East with people throwing rocks at each other over ridiculous things.

Anyone that wants a career in trading can attempt it, and choose whatever "plan" they like...it's unforunate that many make lifelong decisions based on their current situation.

Don't fall for the trap of thinking you're going to make a lot of money right away, even at 100% payout. And if I know that to be true, then how can you think of "quick profits" with 30% payout or some other variation thereof.

Peace!

Don
More...

I have to disagree with you completely on this one, Don.

Here is the reasoning. Say you have a method with which you are:

75% Win - 25% losses

Win to Loss ratio 3:1

Trades Per Day: 200

So far so good? Yes. At this point you want to keep your whole 100% and pay the commission, because, wow, this is great.
Now here's the catch.

Avg Win = $0.003 per share
Avg Loss = $0.001 per share


(NET)


The method allows you to trade 10,000 shares at a time.

10,000 x 0.003 x 150 = + $4500
10,000 x (-0.001) x 50 = - $500

Net = $4,000

Take home = Net x Payout
$4,000 x 30% = $1,200 - Not bad, eh?

And don't tell me that this is impossible - this is my style of trading!

Now, how the hell can you afford to pay commission?

By paying commission, you are limiting yourselves to a specific spectrum of trading, and the situation explained above cannot be used.

What I am advocating is not that 0 comm 30% payout is the best! Not at all, but I am saying that this situation has a LOT of potential and should not be dicarded by:

"if you plan on making money, you want to keep 100% of it"

Many traders do not realize that you CAN trade with no commission and go for profits (that are extremely easy) that couldn't have been achieved before because of commission restraints.
 
Quote from WCOMtrader:



I have to disagree with you completely on this one, Don.

Here is the reasoning. Say you have a method with which you are:

75% Win - 25% losses

Win to Loss ratio 3:1

Trades Per Day: 200

So far so good? Yes. At this point you want to keep your whole 100% and pay the commission, because, wow, this is great.
Now here's the catch.

Avg Win = $0.003 per share
Avg Loss = $0.001 per share


(NET)


The method allows you to trade 10,000 shares at a time.

10,000 x 0.003 x 150 = + $4500
10,000 x (-0.001) x 50 = - $500

Net = $4,000

Take home = Net x Payout
$4,000 x 30% = $1,200 - Not bad, eh?

And don't tell me that this is impossible - this is my style of trading!

Now, how the hell can you afford to pay commission?

By paying commission, you are limiting yourselves to a specific spectrum of trading, and the situation explained above cannot be used.

What I am advocating is not that 0 comm 30% payout is the best! Not at all, but I am saying that this situation has a LOT of potential and should not be dicarded by:

"if you plan on making money, you want to keep 100% of it"

Many traders do not realize that you CAN trade with no commission and go for profits (that are extremely easy) that couldn't have been achieved before because of commission restraints.
More...

There is always an exception. Let's see if anyone else out there simply trades 10,000 shares at a time....I try to respond to the "many" not the "few"... Glad it's working for you...

Don
 
Quote from c_verm:

How do you get $0 commissions?
What type of volume do you have to produce?
More...

Well, you need to contact a firm that does it - that's first.
2 - there are no volume requirements for 0 commission since it doesn't matter how many shares you trade - your gross/net is what matters.

Wouldn't hurt to talk
 
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