My broker charge me 10usd commission for each standard lot traded upon entering position.
To make my risk reward ration 1:1, I simply add [B]one[/B] pip to the stop-loss and use that figure as my target. I’ve been doing this for a very long time, until recently discover this silly mistake…
For example, If I bought a standard lot of eurusd, stop-loss at 10pips away from entry, what is the minimum distance of profit target? (assumed the minimum distance required is 1 to 1)
The answer [U]12pips[/U], because when you lose, total loss= 100usd +10usd=110usd
if you win, total gain= 120usd - 10usd=110usd
Would you rather pay commission or are you happy having trades stopped out because of spread. That’s what’s gonna happen if you’re only using a 10 pip stop loss. Rule of thumb for every 10 pips in stop loss expect to be stopped out the same number of times as spread for every 10 trades. So do you want to have a spread of 0.3 pips and pay commission or have a 2 pip spread and no commission. I think I’ll take commission every time. People just don’t understand how hard it is to make a profit if your’e only chasing 10 pips at a time. It takes more than just a good strategy.
And as a side note, if your broker is charging a $10 commission, time to find another broker. Also rethink how your sl and tp are applied to the trade. Brokers are very clever and us speculators are very ignorant. Again all got to do with spread.
For scalpers, commission is your best friend. As a scalper you are only looking to cross the spread and take profit. That, is it. Nothing more nothing less. Money makers just can’t match ECN for scalping. As I said it takes more than just a good strategy to “make it” at this level.
$10 per side is… freakin’ huge lols my current broker charge much lower than that.
I think it’s much better to scalp forex using binary option because you don’t really have to deal with commission and spread. Binary options is a game changer for scalpers IMHO.
Commission or spread? If first then it is a bit high because my HF charges only 8 usd round-turn. If second then don’t forget about spread widening and slippage during market shakes, it can eat up a considerable piece of your deposit.
Who says that money management are all about easy math?:19:
The commission is charged one time upon entering, with spread lesser than 0.5pip…
This broker should be offering competitive price in terms of transaction cost, introduced to me by a trusted friend… How do you guys think, is it a fair price to pay?
Not knowing which part of the world your from, personally I think your broker is making money at your expense. We a blessed with our choices in Australia especially compared to traders in the USA. Ok so on with the analysis. Your broker charges comm on a in/out bases and that charge is usually billed upon entering the trade. So in your case your broker is charging a $5 in/out commision billed to your account upon opening a trade. Add the spread of 0.5 pip (presuming we’re trading the EURUSD) giving you a cost to trade of 1.5 pips. This represents 15% if chasing a 10 pip profit. Now with my broker I get charged $3.50 in/out and get between 0.0 and 0.3 pip spread so my cost to trade is between 0.7 and 1 pip, 7 to 10%. That’s a big big difference. So if I win 6 out of 10 trades you will need to win 7 in order to equal my earnings making life just a little bit tougher for you.
So to combat cost you add an extra pip to your take profit. Unfortunately now you are going to be stopped out 1 in every 10 trades (just a rule of thumb) so infact you need to win 7 from 9 trades. Tougher again. I don’t know your strategy. You might be lucky enough to be able to do that. To me personally I just write cost to trade as part of money management. All businesses incur costs to conduct that business. You just have to accept that.
This is why when targeting these small TP targets you need more than just a good strategy. You need a good broker to reduce cost of trading. You need go latency for executing. You need good money management. Hope that gives you some answers. I’ll happily answer (to the best of my knowledge) if you have any other questions.
10usd commission? That is outrageous. I do pay 0.3pip for a whole deal no regardless of the volume traded while using Profiforex Variable Spreads, but if am using the Fixed spread, I don’t pay any commission. I prefer using the fixed spread when am scalping the market and sometime on a long term trade.
Some traders prefer no commissions and higher spreads while other prefer to pay a commission and get lower spreads. If you do pay a commission and do not get a very good spread than I would look into switching brokers as you are getting a bad deal.
Just for comparison, FXCM US is getting $4 per entry/exit *($8 round trip) on a 100k lot = $!0/pip on a few main pairs like EUR/USD, then $6 per entry/exit ($12 round trip) for most pairs. So $10 if round trip seems around what we’re getting.
my current broker charge much lower than that.