Saturday, August 8, 2009

Fighting the vig in Day Trading


Brokerage and Taxes form a very big part of any day trader's P/L .

  1. 50% of p&l is being eaten away by commissions and taxes . Even with low commissions for high volume traders taxes form an amount equal to brokerage.
  2. It is difficult to fight the vig if the trader is fixated on the market gyrations and start over trading.
  3. Dr Brett has an excellent piece as always here on Over trading.Comments to the post are also very readable.
  4. Vig, Spread and slippage are the three enemies of any Day trader. I have often seen upwards of 25% spreads being routinely quoted and being bought in Options market particularly in stock options. The trader is being butchered alive in the stock option market with these spreads.

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