Day Trading & Forex Forum

Commissions
The commissions used for each broker in figure 1 (understandably brokers are not named here) are taken directly from their websites. In some cases, commissions charged are dependant on the number of trades per time period (broker A and F). For these an average number of portfolio trades was used as a basis.

Results
The amount of investment capital listed in the first column of figure 2 applies to a single basket (10 stocks). The second column shows the percent of profit without commission fees. The remaining columns show the percent of profit for brokers A through F. Brokers noted with an asterisk charge flat-fees.

Immediately apparent in figure 2 is that percentage gains increases as the amount of invested capital increases, meaning the influence of fees is reduced as trading size grows. The model portfolio uses an investment size between $3000.00 and $4000.00 because of its varying size and strict money management rules.

To realize a profit with this small trading size is possible only with broker A. The same size traded with the other brokers would have produced substantial losses because of the higher fees. It must be mentioned that the brokers in this study are discount brokers with comparatively low fees. If other banks or brokers had been used the results would have been even more dramatic.

Investors with portfolios starting at $90,000.00 obtain best results with brokers offering flat rate fees (without considering money management). In this case broker B was the best choice. Here profits were possible with an investment starting as low as $40,000.00.

Figure 3 shows a graphic of the values from figure 2 using portfolio sizes up to $60,000.00. Retainable profits with brokers E and F are possible with an investment starting at $10,000. B and D are typical of brokers in the USA with very low cost fees. Broker A has an international presence and obviously offers the best conditions, at least as far as commissions are concerned.