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A Few Thoughts about Commissions and Brokers

Traders have a choice of dealing with either full-service or discount brokers. The price difference between dealing with a full-service broker and a discount broker can be significant. But so can the service. If you're an experienced trader who is skilled at order placement and who is trading a system that does not require immediate reporting back of price executions, then a discount broker will suite your purposes well. However, if you're a newcomer to trading and if you require instruction, hand-holding, and coaching, then the additional service you'll get from a full-service broker may be well worth your while. Once you have learned your lessons well, you can graduate to a discount broker if you like. Note also that some discount brokers are not particularly prompt in reporting your price executions to you. Some of the systems presented herein require you to know where you have been filled so that you may place your stop loss, training stop loss, or reversing stop. In such cases you will need to make certain that your broker, whether discount or full-service, understands the importance of reporting your price executions to you promptly. In most cases, trading only active markets will minimize the delay in reporting order fills.

While these are just a few of the important rules to remember when you trade, they are by no means the only prerequisites to success. Develop and maintain your own list or rules. Your list should be based on your own experiences as a day trader, since

your personal list will be more meaningful to you. The rules I have give you are merely a beginning, a base upon which I suggest you build and expand.

Summary

This chapter highlighted the rules I consider important for success as a day trader. While you may disagree with some of my rules at first, I can assure you that in the long run you will come around to my way of thinking and doing. You may want to keep a list of your own rules as your experience with day trading develops. Note that the rules in this chapter have been gleaned not only from years of experience in trading but also from the observation of other traders. Every loss you take as a trader is an expensive lesson from which much can be learned. However, in the absence of attention and study, nothing will be learned from your losses and there will be no progress. Success can often teach you as well; however, as in the case of failure, lack of attention to the reason(s) for your success will mean that valuable information has been lost or not recognized.