Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : MB TRADING -- Ignore unavailable to you. Want to Upgrade?

To: Dave who wrote (3930)	2/15/1999 6:22:00 PM
From: Gary Korn	Read Replies (1) \| Respond to of 7382

I am not an MB Trading customer but can you explain to me how you can make money on a 1/16th with the fees that MB Trading charges? To the best of my knowledge, it is impossible unless you trade a lot of shares. Dave, You are right. It is impossible to make money scalping 1/16ths if the commissions are too high. Which is precisely my dilemma now that I've been fired by Fidelity. (I don't have an MB Account, though I like the functionality.) At FIDO, I would place a trade to buy 200 shares of DELL at say 90. That trade would cost something less than $4 (I had a discount from the standard .02/share rate). If I then sold DELL at 90 1/16th, I'd make 1/16th x 200 shares = $12.50. Subtract from that the buy/sell commission of 2 x $4 = $8.00, which leaves a profit of $4.50. You've got to have runs of 10 to 14 teenies to make serious money, but at least you can escape with a gain even if you pick up just 1 teenie. More important, you can escape with only a minor loss if you end up losing a teenie. That is, you lose $12.50 and another $8 of commissions, for a total loss of just $20 on a bad trade. (You should use a spread sheet to see precisely what commissions you can suffer with given your trading style.) Given my trading style, I believe the critical factor to be looking for is a broker that aggregates shares for the same stock, side and day. Some do, and some don't. Those who don't "aggregate" charge a fixed amount every trade, say $20 per trade, each trade. MBT, like most on-line brokers, don't aggregate. However, some brokers charge $20 for the first trade, then aggregate all additional trades on the same stock (e.g. DELL) on the same side (e.g. BUY) on the same day. With aggregation, you only pay, say, .02/share for all additional shares after the first trade. That makes a 200 share trade cheap, at just $4, and a 500 share trade cheap as well, at just $10. (I try to stay under 1,000 shares to avoid being above the autoexecution limit). What is more, and in addition to aggregation, some brokers don't charge ANY commission until you exceed, say, 1000 shares. Thus, you may pay $20 for your first 200 share trade. Then, your next 4 200-share trades (same stock, same side, same day) are FREE. For these trades, your teenie gains can directly offset your teenie losses. Of those brokers that don't do aggregation, I've found that Yamner yamner.com has the lowest per-trade rate (along with the most diverse execution systems available). What I'm trying to decide now is whether, given my trading style, I can profitably trade at all without aggregation. Best regards, Gary Korn