My Stock Trading Cost was Surprisingly High
I don’t usually look at my trading cost. As long as I can make profit on my trading why should I care trading cost? But I don’t feel comfortable when I look at my trading cost since I started this blog and compare it to at my gain at the period of same time. I feel I should take some measures to lower my trading cost.
If you look at my May trading records the total commission I paid was $709.29. The gain I made was $3,324.08. The gain is already net the commission amount. So if I don’t need to pay commission I would have made $4,034. The cost percentage wise is 17.6%. I feel it is extremely high. So for every dollar I made I paid almost 20 cents to the broker and I have taken a lot of risk. The broker has no risk whatsoever.
I am pondering is there a way for me to lower my trading cost. I think that should be something I keep in mind next month. I don’t know what normal trading cost for the other traders. I would love to hear from you if you want to share. I feel 10% would be an acceptable amount. I know some of the broker charge less commission but I don’t really want to switch broker. I am so used to TDAmertiade.
Looks like the only way is to increase the profit for every trade. For a trading round trip the cost is $20. To make it 10% of the gain then my gain need to be $200. For 1000 shares of Bank of America at round $11 per share the gain per share need to be 20 cents or more. In my last month’s trading my initial bet on a trading day is around $7,000 on most of the days and I feel that was a bit conservative. I guess that’s why the trading cost was high percentage wise.
I believe I can increase my initial bet to around $1,1000 which is still fall into my trading guidelines. Also try to exit when there is over $200 in profit. It is hard though. We will see how it goes next month end.
Added on June 08, 2009
After I decided that I have to stick to my trading guideline I basically have to forget about trading cost. Don’t let trading cost as a percentage of gain get into your mind of deciding when to close a position. As long as I can make money net of trading cost it is good enough.
Related posts:
 |
 Digg |
 Stumbleupon |
 Del.icio.us |
 Reddit |
 Technorati |
 |
That’s what I did by swing trading SKF. I paid lots of commission to the broker too. Then I decided to increase my bet but shorten my stop loss limit. That way I still control my loss.
Usually when my loss doubles my limit during one trading day, I take next day just checking the fluctuating prices but no trade. Usually when you had big loss, your mind is in a revenge mode that that sometimes can be dangerous and prevent you from making good bets.
Yes, revenge mind caused me the big lost today. I always want to recoup my 10,000 lost on my Well Fargo Trade before I started this blog.