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> From: Mark Brown [mailto:markbrown@xxxxxxxxxxxxx]
> Hello Brendan,
Hello Mark,
> BBB> If you can make a trade and be flat (or *slightly* negative)
> BBB> after commissions you'll make a profit (assuming that you over
> BBB> 2/3 of your trades get the rebate vs. the charge).
>
> please give an exact example so that i may better understand it.
Suppose you buy XYZ @ 24.01 and sell @ 24.015 and you have a
commision of 0.005 round trip. Including the commission but not
counting liquidity you're flat.
If you were able to add liquidity on both trades (e.g. you had been
bidding / asking and someone hit your bid / offer) you'd make a
liquidity rebate of 0.002 * 2 = 0.004 on the trade.
If the trades removed liquidity on both trades (e.g. your bid / offer
hit an existing bid/offer) you'd be charged a liquidity charge of
0.003 * 2 = 0.006 (you'd be down this amount on the trade.).
The key elements of a successful system would then be:
1. *Low* commissions.
2. You get the liquidity rebates / charges - they're not eaten by the
broker (well, it'd be nice if the broker ate the charges but then you
probably wouldn't have the low commission :-) ).
3. A system which would be profitable enough to cover your commissions.
4. While generating @ least 75% rebates on the trades (that would net
you 0.001 per trade on average).
5. An automated system.
I have #s 1, 2, 4, and 5 but am having difficulty w/3 :-(.
Hope this helps.
Cheers,
Brendan
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