Thinkorswim Options Commissions - How to Compare Online Brokers' Commissions
Thinkorswim Options Commissions Are you trying to save money on your trading commissions by considering a new online broker
? If so, then you'll need to sit down and compare their plans in a practical way. Thinkorswim Options CommissionsHere's how I would do the math:
I would start out with my trading results from 2009. I'd be looking at my profit & loss numbers for the year, and what I paid in commissions.
Let's say my profit for the year was $20,000, and that I paid $1000 in commissions on 100 stock trades ($10 per trade). Note: I'm using round numbers here to keep it easy.
If potential new online broker X charges $8 a trade - I'd save $2 a trade times, 100 trades. That's $200.
But is it enough to move the needle? After all, that would improve my profits for the year by just 1% ($200 divided by $20,000). That's not worth switching for - unless you are experiencing customer-service hassles.
On the other hand, if you make 1,000 trades a year and could save $5 a trade, you'd save $5,000. That could feed a family for a year And if you're a megatrader moving thousands of trades a month, the savings could easily go into the six figures.
So for active traders, the decision may seem pretty easy - go for a cheaper broker because they savings could be meaningful.
However, there are other issues to consider, like execution quality. Will your trades be completed in a timely fashion at the best possible prices? Thinkorswim Options Commissions
This is a tough issue to figure out, especially when it comes to highly-liquid markets like equities where orders can be placed and filled in the blink of an eye.
My rule of thumb is that on stock orders, you should get a slightly better price than the one you specify on limit orders at least some of the time. If I had to guess, I'd say that Thinkorswim gives me price improvement on one out of three stock trades - pretty good. On options trades, it happens occasionally - not nearly as often as I'd like.
If you never get price improvement, then you can do better elsewhere.
So how can you calculate the potential effect of crappy executions? Here's one way, albeit a rough one:
Take your trading results for 2009, and subtract a minuscule amount - 0.2% or less.
Then, randomly select a few of your trades from 2009, and do the following to your profit or loss on each: hurt your results by 5%. Either add 5% to your loss or reduce your profit by 5%. This is intended to simulate the impact of the broker not being able to get your most important trades done during busy periods.
Take these numbers, and factor them into your estimates on how a new online broker impacts your P&L. If you'd save $300 on commissions with a possible $50 negative impact on the execution side, you really have no reason to switch unless you are dissatisfied with customer service, or are getting hit with silly service charges.
If it seems like I'm overemphasizing customer service, it's because I am. Customer service should be your number-one concern when choosing an online broker. Fancy charting packages and cheap commissions are great on their own - but you won't care about them if you're left on hold for 45 minutes. Thinkorswim Options Commissions
Thinkorswim Options Commissions - How to Compare Online Brokers' Commissions
By: Trading Expert Best Swing Trade Stocks - What is the Best Swing Trading Indicator? Watch Last Seven (2010) online on Megavideo for free Travel Nurse Tools Of The Trade Watch Last Seven online on Megavideo for free Watch The Last Seven (2010) online on Megavideo for free Watch The Last Seven Online on Megavideo for free Watch takers online free megavideo Brazilian Jiu-jitsu Training Videos Online Online Glasses Store A Place To Buy Discount Glasses Watch The King Of Fighters (2010) online on Megavideo for free Advantages of Online Blackjack China And American Trade Friction In The Front Row A Great Online Resource for Genealogy Research