TheStockBandit.net

Having founded a subscription-based trading website, I get the chance to interact with quite a few traders each day. Whether by email or through the community forum on the site, it’s always nice to visit with other traders about a variety of topics. Some of them have lots of experience and have been in the game much longer than me. Others are new and fresh and inquisitive. I enjoy dealing with each of them, but the newer traders often ask questions which I ought to cover here more often. One in particular deals with commissions.

Pardon the pun, but as an active trader, I do pay my share of commissions each year . Some years I pay more than others, and it just boils down to how much of my trading volume that year comes from swing trading vs. day trading. When holding stocks for a few days at a time, or swing trading, obviously the share turnover is much lighter than when scalping for a few cents at a time with a day trading approach. Each style can be lucrative, but the higher your activity level is, the more it can benefit your broker if you aren’t careful.

The majority of part-time traders I run across are on a per-trade (or per-ticket) commission structure, which means they pay a flat rate whether they’re buying 100 or 2000 shares. This can get costly fast. Partial sales will add to the commission bill quickly. The smaller trader begins to see his precious capital erode faster if he’s very active at all, and unfortunately this can soon lead to him passing up good trades out of the simple fear of it costing too much to enter and exit the trade. That’s too bad, especially considering that trading is a numbers game.

Enter per-share pricing. Rather than a flat rate per order, you simply pay a flat rate per share, which means you pay for what you trade and nothing more. In dealing with many newer traders, not enough of them are aware of the per-share commission structures which many brokers offer. And although each broker is different, often times it’s as simple as requesting that your commission setup be changed to a per-share structure.

My broker offers per-share pricing, and I’ve had my commissions structured that way for several years now. Their standard per-share rate is $.006/share, which means if you buy 1000 shares it would cost only $6, which still blows away the $9.95 per trade which so many traders pay these days. Very active day traders can even negotiate lower rates based on high volume levels.

Commissions are truly a cost of doing business in the stock market, particularly if you want access to a sophisticated trading platform, but you can still reduce those costs if you go about it the right way. Regardless of which broker you trade through, find out if they offer a per-share pricing structure. Making the switch should save you a little money in the short term and a lot of money over the course of the year.

Trade well today!

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

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading

Lots of traders (myself included) notice that stocks behave differently as they approach round numbers, like $20 for example. That’s probably due to many stops being set around those levels, both on the buy and sell side. Once a stock gets through the large buildup of orders at those whole numbers, they often see a nice pop because the resistance (of sellers, or of buyers on the downside) is now behind the stock and it’s now able to move more freely.

But have you noticed the same thing in your trading account? As your account nears a nice round number (whether it’s $10,000 or $3,000,000), do you notice some “resistance” in clearing those zones? I sure have.

Of course, once they are cleared, things seem to cruise along nicely again. The trades tend to keep producing, and the account balance climbs.

I finally realized why that is….it’s because as my account approaches a nice round number, my attention gravitates to that number rather than focusing as I should on my trades. I get to thinking about how a particular trade might impact “the number”, but that’s not what got me there to begin with.

Fortunately, my broker has a great tool which allows me to hide “the number” with a single click, and that helps a lot. It makes me turn my attention back to my open positions so that I can manage them the best way I know how. That’s what good trading is all about - managing each position well.

If you’re finding it difficult to get over the hump in your account as you reach a certain number or account highs, HIDE THE NUMBER! I’ll bet it helps you focus on your trades much better, and that alone should get you back on the right track in growing your trading account.

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

A little while back, I discussed how CyberTrader is integrating with Schwab, and the discussion has been somewhat ongoing about what all that will mean. Lots of traders were concerned that certain things they enjoy right now with CyberTrader might not be included unless Schwab’s StreetSmart Pro were to make some improvements. Good news - here’s an update of some details I got today through an email sent by Vincent Phillips, CEO of CyberTrader addressing some of the big items of interest:

Per-share Pricing - CyberTrader’s currently published equity pricing, including per-share pricing, will be honored at Schwab for all current CyberTrader clients regardless of your assets or trading activity. Call Client Services with any questions about your pricing.

Strategy Testing Tools - The same advanced back-testing suite you currently use is already integrated within Schwab’s StreetSmart Pro® trading platform.

Saved Layouts/Watch Lists - Upon integration, your saved CyberTrader Pro layouts and watch list settings will automatically load into StreetSmart Pro. You will not have to learn how to use a new trading platform - it will look quite familiar to you.

Briefing.com Research - In addition to continuing to receive free Briefing.com and MarketEdge research, through Schwab you will also get access to proprietary content like Schwab Equity Ratings, integrated into StreetSmart Pro.

Direct-Access Orders - Schwab’s equity direct-access order-routing technology and tools were developed by CyberTrader. These tools provide clients with choices regarding where to route orders.

Advanced Order Types - In addition to currently supporting limits, stops, trailing stops and alerts with Schwab by the end of 2007 you will also have contingent order-entry capabilities to simultaneously place profit and loss order targets with your buy and sell orders.

Real-time Profit & Loss - Upon integration, you will receive streaming lot-level cost-basis data currently available in your trading platform.

Futures Data - All CyberTrader clients will receive CME® futures data through StreetSmart Pro.

Starting right out with the per-share pricing is great, although they addressed that from the very beginning. Platform-wise, I’m particularly happy to hear that the contingency orders (brackets, OTO, OCO) are still coming, and that futures data will still be available for current CT clients after the integration (since I watch them all day long).

I’ve traded with CyberTrader for several years, so I shared some of the concerns since my experience with CT has been ideal from day 1. I’ve also been a Schwab client for even longer, and I’ve never had a complaint there either. Changes in anything are not always perfect, but it looks like what’s important to me will be kept intact, and unless you’re using an API or placing basket orders, any difference between the two should be minimal. Looks like a nice list and I get the feeling they’ll keep us posted regularly going forward.

Enjoy your weekend & Happy Father’s Day!

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

Technorati Tags: Stock Market, Day Trading, Stock Trading, Investing, Swing Trading