Thursday, July 06, 2006

Do you care about commissions

You should! They can make the difference between a losing and a breakeven trader during the long learning curve.
Looking back, a few years ago I realized, that switching to a different broker will save me about 10k$ in commissions a year. But there is something in addition: For me a breakeven trade is a trade, where I get paid for commissions and not a trade, where I cover at the same price which I paid, when I opened the trade.
But if you have a broker, does it make a difference if you pay 4.95$ or 4.60$ or 4.00$ / Roundtrip trading ES, the Russel or currency futures? No, it does not!
Sure the slight difference might add up, but the only thing important here is, that 1 Tick in your favor pays for commissions and gives you a softdrink.
So as long as 1 Tick pays your commissions for the Roundtrip, you don't need to think about commissions. Only if it's more, you might start looking to switch brokers.