Because he is doing high turnover market making kind of stuff. I am in the same boat. 2019 was painful with comms eating up a lot of profit.
Does IB negotiate commissions?
- Thread starter Humble Investor
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Then both of you are working for your broker and not yourselves. It's OK as long as you are in the clear about that.
What is the alternative? Are you saying that there are attractive trading strategies out there that will produce consistent income while paying only 3% commissions?
Yes of course. Across markets and capital structures. I remember reading a study a while ago by BCG that minimum holding period was 9 months for retail investors to have holdings working for them instead of the broker and exchanges.
I don't know what information I can get from that anecdote. I am a trader not a retail investor that holds 9 months. I want to be green at the end of the month, every month. I want to make 30+% per year every year regardless of market up or down. Only way I know to do this is high frequency, and that means commissions are a decent fraction.
Are you saying that it is possible to do all that, while only paying 3% of gross? That sounds amazing. Please tell us a bit about your trading, if you don't mind.
No, I ain't. Arb pays out 2 to 4 per cent per annum. The trick is to borrow cheaply and gear up 25x. Not accessible to us I am affraid.
Your objective of 30 per cent delta neutral is for the birds really.... 8 to 10 per cent long term is what most people aim for.
As for my trading: I am a CFA holders and specialise in fixed income securities. I spent my days reading financial statements and not trading. I probably trade once a month.
What arb are you referring to? Is this the repo market thing that's been in the news lately?
Been exceeding that objective every year since I started in 2014, except 2019 which sucked. Already exceeded it in 2020 thanks to the market becoming insanely inefficient in march. 8 to 10 percent will be OK once I'm retired
Fixed income is something I know absolutely nothing about. Literally zero. Are you making 8 to 10 percent in fixed income?
Do you trade fixed income with IB? I also trade corporate credit and commissions are killing me. Even SCHW charges less per bond than IB.
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What did they say? How much are you paying in commissions per months? Thanks!