Trading Costs Across Brokers

[Fain]

Such a newb academic study. Testing $100 trades means everything was an odd lot order.

C. Trade Size and Price Execution
"Our main experiment relies mostly on $100 trades. Originally, the experiment involved making larger $1,000 trades in parallel with the $100 trades. However, after six weeks of trading, these trades were halted for two reasons. First, these trades caused the cost of the experiment to be very high, so capping this cost would have resulted in a significantly lower number of observations."

 

[FreeGoldRush]

This is simply untrue. lol. Two things are certain about trading, 1) You can make good money, and 2) You must figure things out yourself.

 

[ET180]

The authors are probably using IB's Fixed commission schedule which is significantly more expensive than the Tiered schedule that many professionals use.

You don't have to be a professional to use the tiered schedule. Although it is not available on the IBKR Lite.

 

[Andor Manly]

This is simply untrue. lol. Two things are certain about trading, 1) You can make good money, and 2) You must figure things out yourself.

It's all about how we figure things out in trading, I agree. You will gain more clarity about trading the more you research on your own.

 

[murray t turtle]

I doubt costs are 6Xat IB compared to TD ameritrade.

%%
NOT likely, but it sounds right TD> beat Etrade[/MS +HOOD. But i've only read 33 pages of 69.
sounds fairy accurate so far.
Except i dont know as of yet how ;
$1] how many $1 stocks they trade + i dont trade any of those LOL.
$100] Average size so far is $100, so that may be a professor idea\LOL I think it was AMZN in therebefore split, so sounds maybe too heavy on $1 stocks
Also HOOD was not first to offer ''free'' trading, as thy stated; but i will not hold that bias against them\ for now anyway. Fun read

 

[tradegoodstocks]

Such a newb academic study. Testing $100 trades means everything was an odd lot order.

C. Trade Size and Price Execution
"Our main experiment relies mostly on $100 trades. Originally, the experiment involved making larger $1,000 trades in parallel with the $100 trades. However, after six weeks of trading, these trades were halted for two reasons. First, these trades caused the cost of the experiment to be very high, so capping this cost would have resulted in a significantly lower number of observations."

"When the experiment started, we also traded 26 of our stocks each day with a target value of $1,000, again using the same logic to round to the nearest share; these stocks were rotated each day. For the 26 stocks with both $100 and $1000 targets, the two trades were placed at the same time with the order randomized. We found similar results across both trade sizes. As a result, we later discontinued the $1,000 trades to reduce our transaction costs and commissions (see Appendix A)."

 

[tradegoodstocks]

Unless a trader has similar trading goals, risk management strategies, mindset, experience and a host of other trading specific dynamics it would be veritably impossible to replicate the authors results.

A better way to make that determination is test your strategy in sim mode. If your time table is shorter then just backtest.

The study is about market or marketable limit orders of small size. You place a marketable order, and your slippage cost is $x - seems like a hard to argue fact. Unless your strategy doesn't fit those parameters, I'm not sure how any of the "stuff" that you mention (trading goals, risk management strategies, mindset, experience, ...) matters.

 

[murray t turtle]

The study is about market or marketable limit orders of small size. You place a marketable order, and your slippage cost is $x - seems like a hard to argue fact. Unless your strategy doesn't fit those parameters, I'm not sure how any of the "stuff" that you mention (trading goals, risk management strategies, mindset, experience, ...) matters.

%%
Thanks for the link;
I remember rereading a lot of it/good read .
Even though 2023 is almost over;
top 10 stocks in SPY ,QQQ are over+ well over $100.[Could be why IBKR + SCHW.... sells ''stock slices''{ fractional shares}]
Of course, many have made fortunes selling stuff under $100, well under $100.

 

[capitalC]

The actual report pretty much comes back with some really surprising data. You can draw your own conclusions.

Old thread I know, but thanks for sharing this. Very interesting!