|
PureBytes Links
Trading Reference Links
|
I'll stick to my original statement...my opinion
for what it's worth....fills are MORE important...
do the math...................
Frank
Frank Cerrone
cerrone@xxxxxxxxxxx
> -----Original Message-----
> From: Brian Massey [mailto:bnm03@xxxxxxx]
> Sent: Sunday, November 29, 1998 7:57 PM
> To: List, Omega
> Subject: RE: Daytrading article in WSJ
>
>
> "Beware of very low commissions....the FILL is the most
> important part"
>
> The age old argument by brokers who want to sell you a
> Saturn for the price
> of a Lexus. A few years ago when commission rates in the
> stock market
> started to fall, the standard rebuttal from those who had
> a vested interest
> in seeing the status quo maintained, was "yeah, but you'd
> better watch out
> for those fills from the discounts." The argument was
> compelling -- even
> though you couldn't really verify it without a lot of
> work -- at first but
> over the years has worn pretty thin lately. Arguments
> like this just fall
> on deaf ears now as people realize that it doesn't really
> make a difference.
> The same is true in futures with the trend in rates and
> quality of service
> headed the same way.
>
> Even if this argument were true, there are problems with it.
>
> First, there's really no way for me to verify that I am
> in fact getting
> consistently better fills from the more expensive broker
> than I would from
> less expensive one. If I do pay more than I'd better
> make damn sure that I
> am CONSISTENTLY getting bad fills because I sure as hell
> know that I'm
> CONSISTENTLY paying more.
>
> Second, slippage is slippage and you pay it when placing
> your order at the
> market or at limit. You really have no control over
> this. But you do have
> control over when you place your order and you don't need
> an expensive
> broker to do this for you. Lots of good traders out
> there aren't giong to
> quibble over a few ticks occasionally anyway.
>
> Third, there's way more introducing brokers out there
> than there are brokers
> on the floor (actually executing the trade). Odds are
> the expensive brokers
> are using the same ones as the discount brokers in many cases.
>
> Good brokers can justify a higher price but not for this
> reason. I'd pay
> more for a broker that gave me good service (fill
> reports, email statements,
> good complimentary analysis, defense when problems do
> arise, etc.) than I
> would for a broker that simply promised me better fills.
>
> All traders owe it to themselves to minimize commissions.
> If you are paying
> more than $25-45/rt (which I consider to be high) make
> sure that you're
> getting something more tangible than just a lick and
> promise from your
> broker that their fills are superior.
>
> Brian
> -----Original Message-----
> From: Franklin A. Cerrone [mailto:cerrone@xxxxxxxxxxx]
> Sent: Friday, November 27, 1998 6:00 AM
> To: HeyPeter; Scott Hoffman
> Cc: omega-list@xxxxxxxxxx
> Subject: RE: Daytrading article in WSJ
>
> Beware of very low commissions....the FILL is the most
> important part..............think of the difference in 2 or 3
> ticks....
> do the math...you'll see what I mean.
>
> Frank
>
> Frank Cerrone
> cerrone@xxxxxxxxxxx
>
> > -----Original Message-----
> > From: HeyPeter [mailto:heypeter@xxxxxxxxxxxxxx]
> > Sent: Wednesday, November 25, 1998 1:37 AM
> > To: Scott Hoffman
> > Cc: omega-list@xxxxxxxxxx
> > Subject: Re: Daytrading article in WSJ
> >
> >
> > Hey Scott
> >
> > Gotta agree with you on how critical transaction costs
> > are to successful
> > DAYTRADING. I have been daytrading for about 2 months,
> > and am finding
> > that even though my gross p/l is positive, when
> > commission is taken into
> > account the business becomes marginal.
> >
> > A while ago, it was mentioned here that the
> > 90%losers/10%winners rule
> > came about from some study at a brokerage house. In it
> > they mentioned
> > that although gross of transaction costs the accounts
> > made money, after
> > adding in commission, the profits were swamped and most
> (90%) LOST
> > MONEY.
> >
> > In daytrading, this is gonna apply even more - that's why
> > I am trying to
> > get on the floor of an exchange where I pay a clearing
> > fee of about $2,
> > and no commish c.f. a retail rate of $20-$30 a round turn.
> >
> > I believe in the long run $20 commish is unsustainable
> > for most people
> > trying to daytrade and pick the bones out of smaller
> price swings
> > intraday, assuming you are reasonably active. (And I
> haven't even
> > mentioned slippage yet . . .)
> >
> > From where I am standing, the only group getting rich
> > from daytrading
> > are the brokers.
> >
> > If you want to daytrade for a living and to give
> yourself the best
> > chance of success then you must,
> >
> > GET YOUR TRANSACTION COSTS AS LOW AS YOU POSSIBLY CAN . . .
> >
> > (Alternatively, ask yourself at what commission rate would your
> > daytrading business stop becoming marginal. If you
> > cannot get such a
> > low commission rate from your broker then don't daytrade!)
> >
> >
> >
> > Penny-wise (hopefully pound-wise too ;-) Pete
> >
> >
> > Scott Hoffman wrote:
> > >
> > > When I daytraded the NYFE back in 1997, I found that
> > although my strategy
> > > had a 25% edge (think 62.5% win, 1:1 payoff) *before
> > slip/comm* after
> > > slip/comm it was a breakeven deal at best. And that's
> > not counting datafeed
> > > / hardware costs. Articles like this never really give
> > the true impression
> > > of just how difficult it is to consistantly make money
> > daytrading. The
> > > transaction cost barrier is the killer. Maybe the
> > barrier in the equities
> > > world has dropped so dramatically that it may actually
> > be feasible. On the
> > > other hand, I posted an article from the WSJ a few
> > months ago about Block
> > > Trading's (a daytrading outfit where you go to there
> > office, use there
> > > equipment, pay them a fee) demise indicating *not one*
> > of their clients made
> > > money. Be sure to be skeptical of casual statements of
> > profitability.
> > > Anybody can say anything. And our human nature is that
> > the more we *want*
> > > something to be true, the less objective - or should I
> > say "the more
> > > foolish" - we become in judging truth from fraud.
> > >
> > > Scott Hoffman
> > > Issaquah, WA
> > >
> >
>
|