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Because of some of the horror stories that I've been reading the past few
days re:various firms and the "blowout" of the accounts....I thought I'd
post a few things that might help others avoid the same.
1)When opening an account:::::::::::::::::::::::::::::
If you're going to take a brokers recommendations.....Ask him how long he
has been a registered broker...Do you want to take recommendations from a
broker who has less experience than you???????? If all that you want is an
order taker, then I wouldn't worry too much.
Make it clear to the broker whether you want his recommendations or not. My
suggestion would be to tell the broker the following:Please,
DONOT give me any suggestions or comment on my orders unless I ask you to.
Thus, when you have a clear idea, someone does not step in to "muddy" up the
picture. If you're brand new to the trading game, I
would tell your broker what you think the outlook for a particular market
is and then ask him/her if he/she had any ideas on the best way to
capitalize on it.
Now before you place the order...determine the maximum amount of
money you will be out if you're wrong. IF that amount is unacceptable to
you, DON'T DO IT. Remember to add this potential loser to all the other
trades that you currently have, so you know the aggregate total of all
loses,because I can tell you almost for sure...ALL trades can be losers at
the same time(You'd be suprised at how many traders forget that fact).
2)With commodities.....$50.00RT should be the max. commission that you
pay....Why??? Ex: IF one IB charges you $90.00RT and another charges you
$50.00RT...that is a $40.00 RT difference. Now let's say you do 10RT/month
or 120RT/year AND you start with a $10,000 account. Well, you're paying
that fellow $4,800 a more/year to business with him then with someone
else.....Let's say at the end of the year you're $10,000 account is at
$7,500....ARE YOU A BAD TRADER????? NO......you're paying too much in
commissions, yet you might feel their is something wrong with your
methodology!!!!!!! Now, IF you had only paid $50.00/RT...you're account
would be at $12,300 or a 20.3% return...HECK...now you're ready to become a
CTA!!!!!!!!!!!!
Final thought....ANYTIME you're account drops by 30% in one month.....TAKE A
STEP BACK....Make sure you are comfortable with what's going on. Sometimes
traders get "stoned"(I don't mean the pleasant kind...it's the "I gotta get
my money back" kind. Wait for the "buzz" to wear off and regroup. Remember
Trading Places????TURN THE MACHINES BACK ON!!!!!!
You'll be glad you did before you're account runs dry.
Hope this helps.....Tom Stein comfut@xxxxxxx
P.S. I've tried to respond privately to some RTers with AOL. They are all
coming back undeliverable??????
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