NexusFi: Find Your Edge


Home Menu

 





Commission shopping w/brokerages


Discussion in Brokers

Updated
      Top Posters
    1. looks_one kronie with 7 posts (9 thanks)
    2. looks_two mattz with 6 posts (12 thanks)
    3. looks_3 Big Mike with 5 posts (23 thanks)
    4. looks_4 SMCJB with 5 posts (9 thanks)
      Best Posters
    1. looks_one danielk with 5 thanks per post
    2. looks_two trendwaves with 5 thanks per post
    3. looks_3 Big Mike with 4.6 thanks per post
    4. looks_4 mattz with 2 thanks per post
    1. trending_up 50,754 views
    2. thumb_up 91 thanks given
    3. group 19 followers
    1. forum 46 posts
    2. attach_file 0 attachments




 
Search this Thread

Commission shopping w/brokerages

  #21 (permalink)
jaytrades
New York, USA
 
Posts: 80 since Jun 2011
Thanks Given: 22
Thanks Received: 83

What is the Futures Broker thinking? Maybe it's goot to try to get an idea what we're really doing since we are on the other side of the negotiation with them. So I'll take a few guesses.

The broker wants to get some idea of my trades per month. They will be making a profit from my volume.

If it's true that most fail, then they must be figuring I won't last too long either, so they will want to lock in early profits before my trading demise.

If I've traded before and I have had at least one account, then I look a little better since another broker, their competition, has already profited from my trading. Or is my demise sooner?

The larger my initial deposit, then the longer I can trade for them, before my demise, and I'll likely have a larger volume of trades, so that's gotta be a big one. What trader is going to pull the plug on their trading before they've really killed the account? If I'm trading impulsively, then I'm not about to suddenly be disciplined and know when to quit....

What are their thoughts and motivations so we can be prepared, rather than how unprepared I was and I'm thinking perhaps many of us are currently, Ray mentioned during the webinar that there may be 10,000 traders affected.

Reply With Quote

Can you help answer these questions
from other members on NexusFi?
Exit Strategy
NinjaTrader
Futures True Range Report
The Elite Circle
ZombieSqueeze
Platforms and Indicators
NT7 Indicator Script Troubleshooting - Camarilla Pivots
NinjaTrader
New Micros: Ultra 10-Year & Ultra T-Bond -- Live Now
Treasury Notes and Bonds
 
Best Threads (Most Thanked)
in the last 7 days on NexusFi
Get funded firms 2023/2024 - Any recommendations or word …
61 thanks
Funded Trader platforms
39 thanks
NexusFi site changelog and issues/problem reporting
26 thanks
The Program
18 thanks
GFIs1 1 DAX trade per day journal
18 thanks
  #22 (permalink)
 
trendwaves's Avatar
 trendwaves 
Florida
Market Wizard
 
Experience: Advanced
Platform: NinjaTrader 8
Trading: ES, NQ, CL
Posts: 703 since Dec 2012
Thanks Given: 2,898
Thanks Received: 2,525


jaytrades View Post
What is the Futures Broker thinking? Maybe it's goot to try to get an idea what we're really doing since we are on the other side of the negotiation with them. So I'll take a few guesses.

The broker wants to get some idea of my trades per month. They will be making a profit from my volume.

If it's true that most fail, then they must be figuring I won't last too long either, so they will want to lock in early profits before my trading demise.

If I've traded before and I have had at least one account, then I look a little better since another broker, their competition, has already profited from my trading. Or is my demise sooner?

The larger my initial deposit, then the longer I can trade for them, before my demise, and I'll likely have a larger volume of trades, so that's gotta be a big one. What trader is going to pull the plug on their trading before they've really killed the account? If I'm trading impulsively, then I'm not about to suddenly be disciplined and know when to quit....

What are their thoughts and motivations so we can be prepared, rather than how unprepared I was and I'm thinking perhaps many of us are currently, Ray mentioned during the webinar that there may be 10,000 traders affected.

For me this process of selecting a broker is the same logic as buying a car. During this selection process the relationship between me and a broker representative is the same as between me and a car salesman. My goal as a consumer is to get the best quality personal service, fastest stable data feed, and lowest cost. For the broker/rep the goal is to sign me up with the least time spent at the highest rate I am willing to commit to without hanging up the phone and going to the next broker. So whatever it takes to get me to sign up with the broker firm. Just like car dealerships, they don't like price shopping, and it's natural to keep prices 'slippery' for as long as possible as they try to fish out the highest rate you will live with. One broker rep. I spoke with this week gave me 3 different quotes for the ES in 15 minutes, and a 4th quote in a follow-up email the next day. The brokers rep. understands the commission rate is the bottom line from their perspective, that's where the real money is for them, everything else is viewed as an enticement to lock me into their product at the highest rate they can.

Unfortunately, on my side of the equation, I will never get a perfect 10 on all 3 requirements (service, feed, cost), I will have to compromise on at least one of those and hopefully not more than one. There are some wonderful small IIB's what I think of as boutique shops. They provide excellent personalized customer service, and typically a very good quality client experience overall. But that personalized service always comes at a cost. If I am trading 10 or 20 contracts a week, paying an extra $1 or $2 a Round Turn in order to have a better overall day to day customer experience is probably worth it in terms of piece of mind. But, the more round turns I do a month, the more important cost becomes. Once I cross above 50 or 100 contracts a week cost quickly becomes the most important factor. At that level of trading, I can overcome any feed quality / stability issue easily enough with a high quality and low fixed cost data provider such as Rithmic or IQ Feed, so I can remove feed quality from my consideration easily enough. It is a lot harder to overcome a $2 per contract 'feel good' overhead at that level of trading activity.

Visit my NexusFi Trade Journal Reply With Quote
  #23 (permalink)
 
mattz's Avatar
 mattz   is a Vendor
 
Posts: 2,493 since Sep 2010
Thanks Given: 2,440
Thanks Received: 3,789


For many beginner traders the concept of commissions and leverage (margin) stands out as the obstacle to success. Naturally, the more you pay the less profit you would make. However, down the road many realize that the real obstacle is really the development of a good method that works, where a quarter in commissions would not make the difference. Further, some charge inactivity, some charge liquidation fees, phone tech support, so there are other fees that could impact your trading. We try our best to give reasonable prices depending on frequency and deposit without some of the extras.

As you progress as a trader you realize that the broker could be a serious element in your success. We are not on the “other side”. We are on the same side! Those of us, who have been doing this for a long time, want our customers to succeed and invest a little more time into our customers so we don’t always have to chase new ones with marketing efforts. When we started our online trading efforts many discouraged me from getting into it, yet I saw a void. Most have become salespeople (brokers) of price. But, what I saw are a bunch of desperate guys trying to sell what their boss tells them to in order to meet a sales quota. We want to stay away from such efforts like a plague. The familiarity with the product and the support for it should be the key for this business.

When Successful traders switch brokers, it is not for the price but for many other reasons. From tech support (familiarity of software), speed of execution, risk management and the ability for the broker to come up with creative solutions to improve trading when this is discussed. The focus of an amateur and the professional from what I have seen is a world apart when seeking brokers. Pros don’t feel like they were taken if they pay a quarter more and try to sharpen their negation skills for the same round.

When you seek a broker my advice is find reasonable prices, someone who knows the software, could help you make smart decision when needed, offer solutions and someone you have chemistry wide and have an attitude of “Where everybody knows your name….”

Some will see this as the ultimate sales pitch, some will take this valuable advice to heart, as we all differ. Whatever it is, I wish you the best in trading.

Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
1 800 771 6748 local 561 367 8686 email [email protected]
Reply With Quote
  #24 (permalink)
 
kronie's Avatar
 kronie 
NYC + NY / USA
 
Experience: Advanced
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Trading: EMD, 6J, ZB
Posts: 796 since Oct 2009


sixtyseven View Post
Mike,

Timely post for me, as I'm an inexperienced trader and looking for a broker.

Another fee is money transfer in/out and the methods they use. Wire fees add up if that's your only option.

Anyway, the point of my post - what factors should the inexperienced consider. I'm looking into the following:-
- Fees
- Customer Service
- Clearing Agents
- Funds Segregation
- Available Products / Markets
- Supports Trading Platform
- Server locations

Anything else?
Thanks


@sixtyseven

the key is NOT the commission, but the intra-day margin rates...

at some time during your logical development and progression down the road to experienced emini futures trader, you will mature to the point of aggressive money management and protective yet aggressive risk management

here's the Holy Grail in simple terms...

Reply With Quote
  #25 (permalink)
 sixtyseven 
Golden Bay, New Zealand
 
Experience: Beginner
Platform: Sierra Chart
Trading: ES, NQ
Posts: 186 since May 2012
Thanks Given: 851
Thanks Received: 337


kronie View Post
@sixtyseven

the key is NOT the commission, but the intra-day margin rates...

at some time during your logical development and progression down the road to experienced emini futures trader, you will mature to the point of aggressive money management and protective yet aggressive risk management

here's the Holy Grail in simple terms...

I haven't really given margins rates much consideration, other than it means I need to hold less of my total account with the broker.
Surely you'll risk those 4 contracts, rather than 1 if it's within your risk tolerance? The difference in margin is neither here-nor-there in terms of total account size is the conclusion I've come to.

Reply With Quote
Thanked by:
  #26 (permalink)
jaytrades
New York, USA
 
Posts: 80 since Jun 2011
Thanks Given: 22
Thanks Received: 83


sixtyseven View Post
I haven't really given margins rates much consideration, other than it means I need to hold less of my total account with the broker.
Surely you'll risk those 4 contracts, rather than 1 if it's within your risk tolerance? The difference in margin is neither here-nor-there in terms of total account size is the conclusion I've come to.

yes, that (margin) is a big factor that isn't often stressed. And also, the minimum account size, which at first glance, seems to not be so important, UNTIL, you realize (from this current situation) that I am going to need to have more than one broker, and, having more than one broker, also focuses on the aspects of *inactivity fees and *monthly fees since one of my current brokers may have a combination of broker/fcm/platform/data feed that I either like better or is working better over time than one of the other broker combinations that I have.

So I might actually approach those minimums on one of my broker combos and adding a few $20's a month, while not a big deal if I am profitable, makes me feel worse when I'm breaking even or struggling thru a down draft.

This current situation has opened up the eyes of traders and we are now compelled to be more active and proactive and empowered in our broker / fcm / platform / feed shopping. This is why they are not so happy since it makes the entire industry that they are a part of, look bad, once again, and that requires traders to require better deals and better service and a little deeper look into these deals.

Reply With Quote
Thanked by:
  #27 (permalink)
 
kronie's Avatar
 kronie 
NYC + NY / USA
 
Experience: Advanced
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Trading: EMD, 6J, ZB
Posts: 796 since Oct 2009


sixtyseven View Post
I haven't really given margins rates much consideration, other than it means I need to hold less of my total account with the broker.
Surely you'll risk those 4 contracts, rather than 1 if it's within your risk tolerance? The difference in margin is neither here-nor-there in terms of total account size is the conclusion I've come to.

@sixtyseven,

it is completely logical, your response, as I already stated that what I shared was an advanced lesson, that takes quite some real-world experience to comprehend, respect, appreciate or utilize. One would never expect a grade school student to comprehend self seeding or self supervision as graduate students have, even in the initial years of college, it takes time to appreciate all the freedoms that age and responsibility confer. As to trading, leverage is everything (and we are not talking the TV series)! From the notion that one can earn $85,000 on a $200 long term risk on Wheat, Sugar, Cocoa, Corn, Soybeans or similar to the notion that for $300 / $400 / $500 one could trade one contract electronic mini-future instead of using $1,000 / $2,500 / $5,000.

Hey, its your money, until the grubby little hands of the broker gets a wiff that: "here comes another one!"

Reply With Quote
  #28 (permalink)
 
kronie's Avatar
 kronie 
NYC + NY / USA
 
Experience: Advanced
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Trading: EMD, 6J, ZB
Posts: 796 since Oct 2009


jaytrades View Post
yes, that (margin) is a big factor that isn't often stressed. And also, the minimum account size, which at first glance, seems to not be so important, UNTIL, you realize (from this current situation) that I am going to need to have more than one broker, and, having more than one broker, also focuses on the aspects of *inactivity fees and *monthly fees since one of my current brokers may have a combination of broker/fcm/platform/data feed that I either like better or is working better over time than one of the other broker combinations that I have.

So I might actually approach those minimums on one of my broker combos and adding a few $20's a month, while not a big deal if I am profitable, makes me feel worse when I'm breaking even or struggling thru a down draft.

This current situation has opened up the eyes of traders and we are now compelled to be more active and proactive and empowered in our broker / fcm / platform / feed shopping. This is why they are not so happy since it makes the entire industry that they are a part of, look bad, once again, and that requires traders to require better deals and better service and a little deeper look into these deals.

@jaytrades

its good to see you took this to the next logical level...

very good analysis

Reply With Quote
  #29 (permalink)
 sixtyseven 
Golden Bay, New Zealand
 
Experience: Beginner
Platform: Sierra Chart
Trading: ES, NQ
Posts: 186 since May 2012
Thanks Given: 851
Thanks Received: 337


kronie View Post
@sixtyseven,

it is completely logical, your response, as I already stated that what I shared was an advanced lesson, that takes quite some real-world experience to comprehend, respect, appreciate or utilize. One would never expect a grade school student to comprehend self seeding or self supervision as graduate students have, even in the initial years of college, it takes time to appreciate all the freedoms that age and responsibility confer. As to with trading. Leverage is everything! From the notion that one can earn $85,000 on a $200 long term risk on Wheat, Sugar, Cocoa, Corn, Soybeans or similar to the notion that for $300 / $400 / $500 one could trade one contract electronic mini-future instead of using $1,000 / $2,500 / $5,000.

Hey, its your money, until the grubby little hands of the broker gets a wiff that: "here comes another one!"

This grade school student needs more help to understand.

Assume a $50,000 total trading pot, with 1% risk ($500) on NQ with a 5 point SL. That requires $2,500 total margin @$500 per contract (minimum account balance of $2,500), and requires $10,000 @$2,000 per contract (minimum account balance of $10,000). Ok, I need to hold more funds in each broker account, and I could probably only fund 3 separate broker accounts, rather than say 15. But with $50k, that's probably ok.

With a $10k account balance I could get 5 contracts @$2,000 margin. With a $10k account balance I could get 20 contracts @$500 margin. But my total risk has gone from 1% ($500 per trade total risk) to 4% ($2,000 per trade total risk). This is what you are saying? Isn't that just poor risk mgmt?

Reply With Quote
Thanked by:
  #30 (permalink)
jaytrades
New York, USA
 
Posts: 80 since Jun 2011
Thanks Given: 22
Thanks Received: 83


Yes, broker and trader are on the same side, except for that moment when they are on the opposite sides at the negotiating table before the partnership has started.

I got a heads-up moment after realizing some things about the shopping experience, which is why I'm posting here in the shopping thread.

It's only very recently that I've graduated from, "nearly dead, crummy, undisciplined losing trader struggling with the beginner psychology issues hump," to "ok, let's get on with the business of trading." The first guy wants cheap, the 2nd guy wants a solid business agreement that will last and therefore, is willing to take a lot of time and effort to shop for it.

Reply With Quote
Thanked by:




Last Updated on February 7, 2021


© 2024 NexusFi™, s.a., All Rights Reserved.
Av Ricardo J. Alfaro, Century Tower, Panama City, Panama, Ph: +507 833-9432 (Panama and Intl), +1 888-312-3001 (USA and Canada)
All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
About Us - Contact Us - Site Rules, Acceptable Use, and Terms and Conditions - Privacy Policy - Downloads - Top
no new posts