Hi everyone,
What suits best for trading smaller amounts ($50 for example)?
Variable spread vs commission?
Thanks!
I would say with 50 or 100 Dollars you should not even trade, but if that’s the case I will go for tied spreads.
Commission based trading generally are offered by ECN brokers. ECN brokers require a greater deposit. A few offers $200 deposit to get a commission based trading. I generally prefer commissions over spreads. However, sometimes fixed spreads will beat with commission + spread. Keep in mind that just because you pay commission, you still have to pay the spread fee.
Since you mentioned “variable” spread, I would definitely go with commission. Variable spread wise, then brokers generally have a mark up. The total fee paid (commission + spread) is usually lower so that’s why I prefer commission.
I’m not sure with $50 you would have much of choice. Most brokers not all but most charge commissions with their ECN and maybe with an STP account if that’s all they offer and ECN accounts generally require more than mini accounts which is generally what they offer a trader starting with a smaller account.
Personally I think you’d be better off with a spread rather than commission with anything under $500, again that’s my personal opinion. As far as starting with a smaller account treat it the same way you would if you were starting with $100,000. A trading method that on the balance of probabilities should give you more positive results long term than negative, a money management system that will protect your starting balance as well as grow it. Once you have the first 2, follow the plan using patience and discipline.
Hey community, I have a quite similar question of which I hope it is appropriate to post here.
Is it correct to say that I do not incur transactions with a broker charging a mark up on the spread as long as I open/close the position with a limit order?
The markup widens the spread so using market orders I would pay more on opening a long position and earn less on closing it. That is especially the case if I open a position with a stop order or close my position with a stop order.
However, when using limit buy/sell orders which actually get filled the markup should not matter since it does not matter that the order would have been filled 1 pip earlier or later.
Happy to hear your thoughts
Why not (with cent account) in the beginning stage to test emotions?
So if trading mini lots(10k) with 5K account what would you choose spread markup at TD Ameritrade or Commission 0.5 per side at Forex com?