September 27, 2007 at 10:32 am | | Comments 5

Make More Than Your Broker!

It’s common for active traders to discuss trading volume and the commission rates they pay their brokers. The hyper-active traders can end up paying a whole lot of money by the end of the year if they’re not careful, but that doesn’t have to describe you. Sure, state-of-the-art trading platforms are great, but of course you always want to be making a lot more money than your broker does from your trading! Here are a few ways to accomplish that.

Be Patient

Waiting for the ideal trading times can be difficult to do. With hotkeys at your fingertips ready to blast orders to the market, buying power to spare, and a market full of stocks which are in perpetual motion, exercising patience and not trading at certain times is about like having the keys to a 911 turbo in your pocket while you just stare at the car and intentionally postpone driving it. Sounds crazy, right? However, as with waiting for the open road to dry out from the rain before you push that sportscar to the limit, it’s always a good idea to wait for the right conditions to surface before initiating trades. Eventually you’ll have the green light, and then you can put the pedal to the metal. Having the patience to wait for your favorite chart patterns to develop will mean less churning of your account in the meantime, so that you ultimately profit with minimal commissions to your broker.

Know When to Stay Away

At times, you’re going to be better off just not trading at all. For some, it’s the first few minutes of the trading day or the very end of the session. For others it’s when you have personal distractions, such as during the holidays when family is in town, or when a life-changing event comes along. Some traders just can’t stand to trade during the light-volume summer months. Whenever your least-favorite trading time happens to be, it’s up to you to identify it and avoid it. Shutting down the PC during that stretch will keep your mind clear as you avoid any confusion which would result from your trading activity then. You’ll be preserving your trading capital (Goal #1) instead of adding to your broker’s bottom line while your account stagnates. Take a trip. Go tee it up or scratch some things off your to-do list. Just find a way to take a break so that you don’t trade when you know it isn’t your ideal time to locate profits.

Keep Your Wins Bigger Than Your Losses

Every trader in every single market will have losses – they are just part of the game. We can’t (and won’t) be right all the time. Accepting that and reminding yourself every day will put you be miles ahead of other aspiring traders. Knowing this, it naturally stands to reason that losses should be kept small. If you’ve read this blog for any length of time, you’ll know I’m big on taking that approach. However, this is an important part of making more money than your broker! Taking small losses when you’re wrong makes it easier to turn a profit with fewer winning trades required, so long as they are larger than the losing trades. The result is your net profitability, which of course means you’re making more than your broker is.

Churning shares simply for the sake of activity means more commissions, which isn’t the point of active trading. I really like my broker, but I sure don’t want them making more money than I do from my trading! Trade with a broker who treats you right and offers you the best deal on the trading tools you need the most, and then put these principles into practice so that you can come out on top.

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

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  1. Taking larger position sizes also can reduce commissions as a percentage.

  2. That’s true David, putting more capital at work per position is another way to do it. I’d just say be sure not to put trading capital at too high of risk in order to simply save on commissions. As long as that’s still in order though, good point. Thanks for posting!


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  1. From Per-Share Commission Pricing | on Oct 4, 2007
  2. From Not a Pattern Day Trader? | on Jun 1, 2011
  3. From How Traders Get a Raise | on Jun 22, 2011

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