How Much $$$ for Slippage and Commission?
- Thread starter Corso482
- Start date
great- another piker on this site with close to 400 posts who has never placed a single trade.......
there should be a section where the signature is where you can check if you are an active trader or a wannabe, then when you see posts, you can separate the retail pikers from the real shooters.......
there should be a section where the signature is where you can check if you are an active trader or a wannabe, then when you see posts, you can separate the retail pikers from the real shooters.......
Yep, I'm a bonafide piker. Actually, and I'm still a piker regardless, I have placed a real trade. Back in late '99-'00 I placed quite a few trades which resulted in me losing most of my account at Suretrade, which is why I haven't traded since and have committed myself to research. But, as I said, I'm still the King of all Pikers. Baron? Could you put "Piker" next to my name?
I will give you some honest input here. Lets say you develop the "holy grail". The best thing since sliced bread....robust...highly profitable...small drawdowns and big gainers. The odds are stacked against you for not using the system immediately. MOST....(note I said most) mechanical trading systems (even if executed in an discretionary manner) have a limited shelf life. The reason your system works today may be gone tomorrow.....Thats is a fact. I understand that you have other commitments, so the best thing for you to do is trade lightly. Even if it is with a 2k account with IB. As the NIKE ads say "just do it". If you don't have the time because of school let a trusted friend or family member trade the account using your parameters. Just my .02 . Good luck.
indahook, I appreciate your advice.
Here's the situation: My main efforts the past couple of years have been to develop a swing trading system. I believe the one I've developed works well.
The system calls for me to divide my capital into 10th's. If I opened up a $2000 dollar acct. at IB, that would be $200 per position. If I'm not mistaken, IB's minimum commission is $2, correct? That would mean I'd lose 1% per trade just from commissions. I'm not prepared to play with that kind of a handicap. In order to make the commissions negligible for my system, I'd have to have around $10,000. Anything less and the commission would kill me. Keep in mind that the system makes about 500 trades a year.
So, unless i'm mistaken, I'm going to be the piker that I am until I can raise about 10k.
I'm also not in a rush to trade the system now. It's backtested well since '98. I think there has been enough market variety to ensure it's robust enough to not stop working all of a sudden.
If I never trade, or my system stops working, oh well. I never intended to make a living out of trading anyway. Worst case scenario, I've learned enough about trading to pick a decent hedge fund. Most importantly, I'll never do something stupid like my father and put WAYY to much money into one stock and ride it all the way down. If all this research into trading and the market prevents me from making dumb mistakes like that, then it's all been worth it.
Hello corso, good for you for doing lots of research first, but when it comes down to it (mechanical system or discretionary) you MUST trade! Hypothetical backtesting is good, and has its place, but those trades must be translated to the real world of trading for anything to be considered "worth it". I would hate to see you do years of research, to find out that you made one little error in your coding or something to say that your system does not work properly? y'know? There are lots of nuances in the market that backtesting can't account for, so do what you can to get a little more than a $2k account going and start to trade what you can. Hope that helps.
Don't let these guys piss in your cheerios. You've got the right idea. But be skeptical of your systems enough to keep probing them. And it is always true that anything can happen, so trade small. You can open an IB account with 2k and download a free simulator for TWS. Forward test those systems too! Actually following the system will be another challenge for your, if you are like most.
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Quote from Corso482:
I could be wrong, but I always thought the meat of system trading was in the preparation. Execution is just a matter of sticking to the plan.
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Corso,
I think you are wrong here. While developing a good trading method is no walk in the park, I think that strictly adhering to it is at least as difficult. Someone told me this before I started trading and I did not quite believe it. In fact, it will continue to sound counterintuitive until you commit your money to the trade.
It has been said that paper trading is like walking on a plank on the floor. Trading with real money is a bit more like walking on the plank when it is elevated 50 feet in the air (assuming no wind). Same plank, same distance. But I surmise that your thoughts while crossing will be slightly different. Similarly, if you read Reminiscences of a Stock Operator, you will recall the tale of the man who was going to have a duel at dawn. If memory serves, he confidently said that he could hit a glass at 20 paces. The question posed was, could he hit that glass at 20 paces when it was aiming a bullet at his heart? My intention is not to discourage you, by any means. Rather, I suggest that you do not trivialize the challenge of "sticking to the plan" once you have developed a good trading method. Good luck.
Regards,
Thunderdog
Quote from Corso482:
I could be wrong, but I always thought the meat of system trading was in the preparation. Execution is just a matter of sticking to the plan.
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Corso,
I think you are wrong here. While developing a good trading method is no walk in the park, I think that strictly adhering to it is at least as difficult. Someone told me this before I started trading and I did not quite believe it. In fact, it will continue to sound counterintuitive until you commit your money to the trade.
It has been said that paper trading is like walking on a plank on the floor. Trading with real money is a bit more like walking on the plank when it is elevated 50 feet in the air (assuming no wind). Same plank, same distance. But I surmise that your thoughts while crossing will be slightly different. Similarly, if you read Reminiscences of a Stock Operator, you will recall the tale of the man who was going to have a duel at dawn. If memory serves, he confidently said that he could hit a glass at 20 paces. The question posed was, could he hit that glass at 20 paces when it was aiming a bullet at his heart? My intention is not to discourage you, by any means. Rather, I suggest that you do not trivialize the challenge of "sticking to the plan" once you have developed a good trading method. Good luck.
Regards,
Thunderdog
Nice post Thunderdog