commissions??

S

skuttlebug

Hi,
I'm a newbie and plan to try my hand at equities trading.

I'm a little confused as it seems that even with fairly low commissions, it's impossible to make money?

Is my maths completely wrong?
From what I gather, 1c per share is a fairly typical, cheapish deal?

So, if I was trading 300 shares. (would be $3 to buy and $3 to close?)
Placed 12 round trips
Ended up making 25 cents on the day on the trades:
Would profit be $75 (25x3) minus $72 in commissions leaving me +3 dollars on the day despite making 25 ticks?

And the same example on 800 shares would be $200 minus $192 in commissions??

Are my calculations off somehow?
 
Even if someone had an even better day, and only placed 7 trades and made 29 ticks.
Even on 800 shares with 1c per share comissions ($16 per roundtrip?), they would only ended up with $120 profit after $112 commissions??
 
Let's keep it simple. Your first example is correct.

"So, if I was trading 300 shares. (would be $3 to buy and $3 to close?)"

There are two basic commission structures when you trade equities. Ticket charges and a fee per share. The bigger the order, the cheaper the ticket charges become. Ticket charges are always sent through some route that has payment for order flow and you have no idea where your order is sent. As long as you can get good fills, you might not care. Direct market access DMA, is better for many equity traders. It gives you control over your order, offers the opportunity for the maker-taker system of rebates/charges, and you get charged per share, sometime with a minimum charge.

If you are scalping pennies, you will need DMA and very low fees. If you are trading for more margin on each trade, you can make money with either type of commission fees schedule.
 
1245 said:
If you are scalping pennies, you will need DMA and very low fees. If you are trading for more margin on each trade, you can make money with either type of commission fees schedule.
More...

Hi.
Well my example came from an average of the results that i've been tracking in an excel spreadsheet from my demo trading on an equities platform.

Typically i'm finding about 10 trades per day that meet my critera.
I want to keep stops fairly tight (say 10c or so) and I aim to get 30c+ on my winning trades, but the market often doesn't 'play ball' and I bail with a much smaller profit than i would have liked.

Still, after a few sessions, I was fairly pleased with myself, thinking:
''Cool. A few losses today, but still up 25 ticks on the day. That's good!!''

But then, once i'd played around with commissions, it seems that unless you're an amazing trader making 100+ticks per day, or are trading thousands of shares at a time, then you're on a hiding-to-nothing!

I was hoping that my maths was wrong or maybe 1c per share was actually a very expenzive deal or something.

Is that why everyone here seems to trade futures as opposed to equities? Commissions make it impossible?
 
skuttlebug said:
Hi.
Well my example came from an average of the results that i've been tracking in an excel spreadsheet from my demo trading on an equities platform.

Typically i'm finding about 10 trades per day that meet my critera.
I want to keep stops fairly tight (say 10c or so) and I aim to get 30c+ on my winning trades, but the market often doesn't 'play ball' and I bail with a much smaller profit than i would have liked.

Still, after a few sessions, I was fairly pleased with myself, thinking:
''Cool. A few losses today, but still up 25 ticks on the day. That's good!!''

But then, once i'd played around with commissions, it seems that unless you're an amazing trader making 100+ticks per day, or are trading thousands of shares at a time, then you're on a hiding-to-nothing!

I was hoping that my maths was wrong or maybe 1c per share was actually a very expenzive deal or something.

Is that why everyone here seems to trade futures as opposed to equities? Commissions make it impossible?
More...

You can do better on commissions with more volume. That rate is high end and more toward investors rather than day traders.

If you would like to PM me your contact information we can talk more openly.

1245
 
You must log in or register to reply here.
Back
Top