Article Order Fees and Portfolio Performance

T2W Bot

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Traders go to great lengths optimising market strategies and trading systems to obtain good profitability. Unfortunately, those profits often deteriorate substantially after factoring in order fees. This article examines the effect of various broker commissions on portfolio performance and determines the optimal investment size needed depending on broker fees. The choice of broker greatly determines if a trader survives successfully in this business or quickly gives up in frustration.
Brokers use various methods to determine their pricing structures. They are often based on either block pricing (i.e. number of stocks per trade, investment amount, trading activity) or fixed pricing, better known as flat rates (fees independent of number of stocks traded or investment amount). That?s why investors should determine trading magnitude and frequency before making a short list of brokers. Of course, commissions are only one aspect to be weighed when considering a broker, but as will see...
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Many uk users of this site are spread-betting. The need to choose a company with a tight spread is not specificaly mentioned, but the importance of doing so is clear from the article's conclusions. As is comparing the relative costs of trading via s.b. v. a direct access broker.
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