Comission and Bullet Rates

I agree totally with samba i made the math also and a small office with 10 traders trading very risk averse and all traders keeping about $ 50.000 in trading account the firm was making obseme amounts of money "risk adjusted and labor-adjusted"
So we basically complained like mad and we got out rates from .0085 to .0055 still fighting though for even lower.

My believe is that any company in any Industry has to make money according to the risk they take. If you take high risk you are entiled to make big money if you take no risk you should make moderate money, now obviously it's our job as traders to fight for better rates and help wake each other up so we can all together get better deals.

I remember i had this discussiong with a trader frined of mine, whenever i would talk about lowering rates he would tell me "common man but the firm has to make money too" i told him that i agree 100 % with that since nobody whan't to startd a company for free. but when i ran the numbers for him he said you know what you are right they are making more then enough so we fought like crazy until we got better rates.
 
Quote from chiguy:

i say samba buddy why don't you open up your own prop firm and get sucked dry by personnel and technology expenses. do you think it all just happens by magic. if you can do it better and cheaper go for it. that how the free market works. quit bitchen', build it and we all will come.
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Hey buddy, why don't you do the math and then post something like "get sucked dry" seriously, how much do you think % or revenues "support(yea right)" and technology is? I agree, it'll cost alot, but AS A % OF REVENUES the shop is making a killing. GET REAL, factor in all the costs you want (except bloomberg for every trader), PARK AVE RENT, AERON CHAIRS, QUADRUPLE FLATSCREENS FOR EVERYONE!.
 
Quote from traderjimbo:

Also the costs for trading on ECN's has gone way up -- take a trader who mostly takes liquidity are right there the cost is .003 to .004 (for Arca outbound and instinet outbound)
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Agreed, but mostly I trade Listed so those rates are real. But even trading nasdaq, I find that on balance, I'm a slight provider of liquidity, so my costs for trading nasdaq arent significantly different from NY. This firm I was at once "mistakenly" reversed my adds with takes for a few few weeks until I caught on. Funny business we're in.
 
What do you believe would be a fair per share (all in rate) for somebody who does about 650,000 shares per month on average and has about 400k in one particular account? Open to all responses please. Keep in mind this is someone trading at home on the retail side. Thanks.
 
working for? I remember you from past posts and it sounds like you're a partner in some LLC or prop group. Why are you telling people to stop posting about talking about commissions here when the subject of the thread is COMMISSION AND BULLET RATES??? Are you some idiot?



chiguy
Junior Member
Registered: Nov 2002
Posts: 13
03-17-03 01:44 AM
no one wants to pay more than they have to in either commissions or bullets but if your profitability depends on that last half a cent or being able to enter orders with 4 decimals places then maybe you should consider some other line of work. trading is an art as well as a science and takes time to learn. everything you need to know is right there in front of your eyes. let us move on to something more beneficial to discuss... what do ya say about that folks....



Slave2Market
Junior Member
Registered: Dec 2001
Posts: 23
03-17-03 02:05 AM
Chiguy what are you talking about?
I'm glad people are keeping this thread alive, and I hope they continue to do so. Anybody who day trades equities successfully knows that commission is EXTREMELY important!! In the current market environment, a low commission structure can determine whether a trader survives ... or is forced to quit. If you're not a day trader, or are a very low-volume trader, then I agree, commission is not as important as other factors. This thread has allowed me to keep track of the prevailng rates, and enabled me to negotiate a lower commission. This "last half of cent", that you say is unimportant, has added 10's of thousands of dollars per year to my botton line.
Regards,
Slave2Market


nitro
Elite Member
Registered: Sep 2001
Posts: 2815
03-17-03 02:11 AM
Re: Chiguy what are you talking about?

every 1/10 of a cent off my comm, I have calculated, adds about 8K to my bottom line per year.
nitro
 
i am a member of both the cboe and the cbot. i started on the floors as a price reporter in 1980. i have seen a lot but have never seen as many whiny kids as on these boards. you have the best rates and information flow that has ever been had at any time in the history of this business. the internet has leveled the playing field for all of us. if you were charged with making a fair and orderly market in the face of a crisis could you? i feel i bring a little common sense and knowledge from my experience to these boards. if i offend i am sorry but you sir are a bit out of line. i hope that you grow up and realize how good you have it.

respectfully yours,

chiguy
 
Quote from chiguy:

i am a member of both the cboe and the cbot. i started on the floors as a price reporter in 1980. i have seen a lot but have never seen as many whiny kids as on these boards. you have the best rates and information flow that has ever been had at any time in the history of this business. the internet has leveled the playing field for all of us. if you were charged with making a fair and orderly market in the face of a crisis could you? i feel i bring a little common sense and knowledge from my experience to these boards. if i offend i am sorry but you sir are a bit out of line. i hope that you grow up and realize how good you have it.

respectfully yours,

chiguy
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Are you out of your mind? First: internet leveled the playing field? Get real moron, it's not like every daytrader has access to firstcall and bloomberg. The information flow on the institutional side far surpasses anything that most of us have on the outside. Being a former professional you should know this and should be ashamed for saying the things you do. Second, I was a marketmaker at Smith Barney for 5 years so yes, I have been 'charged with making a "fair" and orderly market for my customers, many times in the face of a crisis. And to be honest, I usually made prices where I felt like I had a good probability of being able to close the trade for a profit. It's a HUGE advantage to trade AGAINST retail order flow. I really think you're off the mark on your comments, however the only reason I think that maybe you think the way you do is because your background is from the pits. From what i felt, the information in the pits was always secondhand compared to being in an institutional house. And maybe you really dont understand how a lot of people on ET trade. In the course of a year, the average trader probably scalps 1000-5000 share lots 10,000 times. The AVERAGE profit is probably only .5 to 2 cents per share. If you can understand this game then maybe you'll understand why the commissions are really critical. But then, if you were on the floor with locals, you should understand that anyway no?
 
chiguy,
I'm giving you the benefit of the doubt, but then again maybe you are also someone with a vested interest in a prop firm. We the traders definately dont have it as good as the owners of firms and LLCs UNLESS COMMISSIONS COME DOWN IN LINE WITH THE RISK/LABOR taken by the respective parties. Too many traders are just getting shafted. Secondly, commissions have come down but look at the market environment, in a market where prices have been going down for 3 years, stocks have gone down by 80%, and clearing costs have plummeted, dont you think commissions should come down drastically as well? PEOPLE WITH VESTED INTERESTS WILL DO EVERYTHING POSSIBLE TO KEEP THE EXISTING PRICE STRUCTURE TO BENEFIT THEMSELVES.
 
Quote from sambatrade:

chiguy,
I'm giving you the benefit of the doubt, but then again maybe you are also someone with a vested interest in a prop firm. We the traders definately dont have it as good as the owners of firms and LLCs UNLESS COMMISSIONS COME DOWN IN LINE WITH THE RISK/LABOR taken by the respective parties. Too many traders are just getting shafted. Secondly, commissions have come down but look at the market environment, in a market where prices have been going down for 3 years, stocks have gone down by 80%, and clearing costs have plummeted, dont you think commissions should come down drastically as well? PEOPLE WITH VESTED INTERESTS WILL DO EVERYTHING POSSIBLE TO KEEP THE EXISTING PRICE STRUCTURE TO BENEFIT THEMSELVES.
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Hey Samba, outside of you breaking up your posts into several pieces everytime you have something to say to prop up your post count (Moderator should take a look at this), why don't you go out and start a prop firm, and offer the low commissions you imply can exist. We will all join your firm and make you a millionaire because your costs will be close to zero, and the 1/10 commissions you'll charge us will make the rest of us rich because we'll get to keep everything we make. Basically you and everyone else who thinks the clearing firms have it easy on the cost side are morons!!!!! Go try renting space, running all the T-1's, buying all the PC's and software, hiring the tech, accounting, trade support, HR, etc... employees, and paying the self clearing fee's and exchange membership fee's, and tell me what your costs will be. Then tell me how many shares you would need monthly just to cover those expenses, and then we'll see how cheap it is to run an operation and give out 1/10th rates. Here's a start for you, $250,000 in expenses a month which assumes you run a skeleton crew hoping for no major problems to arise, you will need the firm to generate 250,000,000 shares a month to breakeven. Now, go talk to a clearing firm, and you'll see that their expenses are much higher than that, and in the current enviroment those volume numbers are extraordinary. Plus, what firm do you think will want to run just to break even or make a couple of grand? None, that's right, just like you can probably pay $1 for the box of cereal you pay $4 for, Kellogs is not there to make no money. And firms have to build in cushions to protect from current enviroments where they are taking hits left and right. You still think those rates are possible.

Now, don't get me wrong, I would love to pay those rates as well as give them out, but as you can see, they are impossible.
 
couldn't have said it better myself. it's nice to see there are other folks out there with both eyes open and a little bit of business acumen. alas, it seems that common sense is not so common. thanks for your support.

chiguy
 
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