Brokerage will Kill you

[#1]

I have between 20k and 40k in my derivatives account. I trade currencies. This last tax year I lost R2950. If I add up all the brokerage, it comes to 41k. So my trading with a 20k to 40k account actually realised 39k. Not bad, over 100% of my average trading funds. But OST took it all.!

[SimonPB]

they didn't take any of it, you gave it to them by over trading and/or not taking costs into account .. I seen this more times then I can count ..

[#3]

Sure Simon, I understand that there are costs involved, but my point is that the amount of movement in the price required to cover the costs of trading is so high that it is very difficult to come out on top. Derivative trading is supposed to be short term, but it takes massive market swings to cover the high costs and still make a buck.

[partridge]

You should print this and put it on the wall. "I must not trade small amounts of money and if I am going to do this I need huge volatility when I do" ...

[#5]

Sounds like a comparative study needs to be done on the various instruments one can trade, i.e. CFD's, SSF's, index futures, currency futures. Risk/costs/potential reward. I have moved from SSF's to index futures.

[Quakedog]

You need to commit more of your cash to well studied trades with bigger volatility on the side yur on. Good luck dude. My opinion trade the shares rather and forget the geared stuff for now.

[sponono]

trading shares is more expensive (about 0.7% to buy and 0.7 to sell) while CFDs cost only 0.7% both legs. The trick is trade only high probability trades and to have a sensible profit target (anything less than 10% is just not worth it) and to avoid over-trading

[THRESHOLD]

Start by renegotiating your comm's. They are way too high.

[SimonPB]

agreed, and that something you need to figure out before hand ??

[SimonPB]

bigger picture here is that the farmer is right .. biggest killers of traders; costs, spread and slippage .. all three need to be managed down as much as possible (they can add up to many % in/out) and hence why ALSI futures so attractive as all three massively low ..

[Preston]

Simon, high trading cost can be offsetted by good quality, high probability trades.

[#12]

Thank you Simon. I'm not crying into my beer about having lost an insignificant amount of money. What I am putting across is that I made in excess of 100% trading in my currency account and that's good going, but the costs killed it all and then some. So, again, beware, - the Brokerage will Kill you.!

[SimonPB]

sure, and it all needs to be included into an overall trading system

[Preston]

Agreed.

[Rams]

farmer, i understand the point you making, you have a good trading strategy but maybe not a good money management sysytem...to get the ultimate reward, which must be maybe three times the stop loss, you have to milk the trend, stay in the trade and exit at predetermined profit targets or at the stop loss...dont exit in between...profit target or stop loss, otherwise you overtrade, chase losses and exit too early...lots of discipline required for this and the EXIT is the Holy Grail of trading...

[Rams]

farmer, i understand the point you making, you have a good trading strategy but maybe not a good money management sysytem...to get the ultimate reward, which must be maybe three times the stop loss, you have to milk the trend, stay in the trade and exit at predetermined profit targets or at the stop loss...dont exit in between...profit target or stop loss, otherwise you overtrade, chase losses and exit too early...lots of discipline required for this and the EXIT is the Holy Grail of trading...

[Rams]

in short without the discipline in the EXIT...you can be right all of the time and still end up losing!

[Prestonmyhusban]

good quality, high probability trades

[Creature_of_the]

Trade shares, not weapons of cash destruction............

[SimonPB]

probably best advice so far