@ Liquid Validity and the hare,
Great conversation.
Just to extend a little on what you've both touched on is the spread/commissions.
These can be the big killers and hidden/ignored at best.
So many times I will see people trying to trade for 10pts and paying a 1pt spread. This means that you have to acquire 10% just to break even.....worse still that's assuming that every trade wins. As every trade does not throws this figure even higher.
I get upset if my comms run higher than 2% on average. I generally strive to keep win/loss and monetary ratios above 2:1RR
I don't think personally that a lot of thought goes in to this concept and the spreadbetting companies and even as far as brokers naturally exploit this. In other words its set up and design is so hard that most will fail by its very intended nature. The house wins everytime.
Lee
Completely agree, paying or earning the spread makes a huge difference
with short trade duration / average target.
Even when someone is capable of overcoming the hurdle of paying the spread in
such circumstances, I've never been able to understand the point of losing so
much to spread when it could be a substantial boost.
As most won't overcome that hurdle, it usually turns out to be churning, which
may even give the impression of profit for a certain time, but can also easily
lead to a prolonged and inexplicable drawdown as well.
If you ignore spread, its much easier to come up with something profitable...
Market makers are often described as the ultimate scalper.
Their business is centered around earning the spread,
yet so many do the exact opposite and pay it...
With my own tests and research, costs are by far the biggest hurdle.
The effect of earning spread or rebates is a game changer unless you are
a swing trader or longer.
In fact that is my next area to concentrate on, problem is,
automating a procedure for missed limit fills and the knock on effects is not easy,
at least for me anyway.
Unfilled orders can do more harm to bottom line than average slippage / costs on
market orders, at least with the frequency I trade at (0-2 per day).
Then again my typical exit times aren't particularly prone to much in the way of
slippage anyway, currently I'm more likely to get slipped on entry.