About Pay-per-share brokers vs Pay-per-trade
#1
Hi guys,


Good evening, and advanced Merry Christmas!

I have just finished reading "The truth about day trading stocks" by Josh DiPietro. I am left with a lot of questions mentioned in the book. One of which, are the existence of pay-per-share brokers...

Is there an existing pay-per-share broker here in our country?
All I have is a pay-per-trade broker, COL. It rips me a minimum of 21 PHP per trade (buying/selling).

Have you guys tried using pay-per-share brokers? and which brokers are these?

How do you maximize your trade without the broker biting most of your capital per trade? Coz you know that the brokers always win regardless of the transactions, and outcomes of trades.

Thanks po in advance.
Mash THAT POTATO!
My blog: Jaydee Says So
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#2
...how does that work? I can't imagine that bos...


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#3
Hi Sir Ollie,

I've highlighted some excerpts from the book:

Pay-per-share brokers do charge you a monthly fee, and, depending
on what data feeds you require, it comes to $150 to $250. That plus their
daily pay-per-share fees may sound like quite a lot, but compare it to the
pay-per-trade commissions, and it starts to look like nickels and dimes.
The average per-share cost is between $.0035 and $.0065. That means
that if you buy 100 shares of any given stock, you pay only 35c/ to 65c/ cents
for that 100-block execution, not $9.99 like with online pay-per-trade fees.
So you can imagine how happy I was with the dramatic fee decrease.
If I traded 30 round-trip trades (60 executions) with 100 share-blocks, then
my commissions for that day were roughly $30 to $35 (30 round-trip trades
of a hundred shares: 60 × 100 = 6,000 shares—6,000 × $.0055 = $33). That
same trading day with a pay-per-trade broker would have cost me $600 (60
trades × $9.99)!
So okay, now maybe you’re wondering: What if I wanted to purchase
20,000 shares in one trade?
That’s an excellent question, and the answer is frightening.
With a pay-per-trade broker that would cost you only $9.99, but with a
per-share broker it would cost you $110 (20,000 × $.0055 per share). Yeah,
that’s not a misprint.
The point here is that you should never purchase more than 500-share
blocks at a time, unless you’re a whale trader (professional day trader). To
refresh on this critical issue, reread Chapter 7, “Why Overexposure to the
Market Can Hurt.” That’s where I elaborate the danger of purchasing huge
share blocks.


Pero in a quick summary:
Yung commission ng broker mo PER transaction would be "No. of shares purchased" x "the broker's rate for that board lot".

Issue:
Yung main issue ko kasi with COL and the other online brokers is that they charge you a minimum commission of 20 PHP per trade (if the .25% commission for the transaction is LESS THAN 20 PHP).

Marami kasi akong cases na "test" buy lang yung gagawin ko sa isang stock. So, minimum amount lang yung ilalagay ko. Kapag umangat, ok lang, add ako. The problem is that most of the time (with my trading system), I have to cut loss kung di natuloy yung uptrend (like AGi or MEG) or sell dahil sideways (like BPI or MBT). Kaya medyo malaki yung nawawala sa akin na amount kung isa-sum up mo yung mga commission ng broker (accumulated amount).

In order to maximize the commission, I was enthusiastic about this pay-per-share broker that I've read from the book. I didn't even know they exist (at least in the US market). Baka sakali lang na meron dito sa Pinas na ganung type na broker.
Mash THAT POTATO!
My blog: Jaydee Says So
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#4
philippine stockbroker fees (commissions and tax) is one of the highest in asia, in thailand a live broker charge only 0.25% for a roundtrip trade and gov't only charge 7% tax on that 0.25% not on the entire trading amount.they also charge only 0.15% for online trade.Because of this i'm very sure there's only just 0.1% or nobody at all who can make money consistently daytrading the PSE.you only make money when your stock go up beyond 1.1% commission.No wonder very few play the stock market in the phillipines.Besides,why do you think there are numerous stock brokers doing business in the philippines whereas very few people play the market?bec. brokerage business is very lucrative one in RP. I'm sure if they lower the cost of trading they don't need to find traders or investors because people will play if they think they have a good chance to make money trading the PSE.
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#5
(10-26-2012, 10:38 PM)theEdge Wrote: philippine stockbroker fees (commissions and tax) is one of the highest in asia, in thailand a live broker charge only 0.25% for a roundtrip trade and gov't only charge 7% tax on that 0.25% not on the entire trading amount.they also charge only 0.15% for online trade.Because of this i'm very sure there's only just 0.1% or nobody at all who can make money consistently daytrading the PSE.you only make money when your stock go up beyond 1.1% commission.No wonder very few play the stock market in the phillipines.Besides,why do you think there are numerous stock brokers doing business in the philippines whereas very few people play the market?bec. brokerage business is very lucrative one in RP. I'm sure if they lower the cost of trading they don't need to find traders or investors because people will play if they think they have a good chance to make money trading the PSE.

nice. thanks for bringing this up.
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#6
(12-23-2011, 11:10 PM)jaydee Wrote: Hi guys,


Good evening, and advanced Merry Christmas!

I have just finished reading "The truth about day trading stocks" by Josh DiPietro. I am left with a lot of questions mentioned in the book. One of which, are the existence of pay-per-share brokers...

Is there an existing pay-per-share broker here in our country?
All I have is a pay-per-trade broker, COL. It rips me a minimum of 21 PHP per trade (buying/selling).

Have you guys tried using pay-per-share brokers? and which brokers are these?

How do you maximize your trade without the broker biting most of your capital per trade? Coz you know that the brokers always win regardless of the transactions, and outcomes of trades.

Thanks po in advance.

Wala dito sa atin yung pay-per-share. Most that I read were on US Markets.

Maybe it will also be available here after 50+ years if our local market will be that big and will have a strong competition between brokers. Big GrinBig Grin

Pay per share has an advantage when you are trading high value stocks. These two types have advantages/disadvantages depending on the type of your order.
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#7
I think this is a good idea. Maybe COL would have this, how 'bout suggesting this to them? I here they are a logical lot and would surely be in this if there's money to be made or this would increase online traders. All in all, thanks for bringing this up. I am always amazed as to the variety of ideas man can come up with, that's thinking out of the box!.
The World is a Vampire . . .
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#8
erratum: I hear. . . as supposed to I here . . . what am I thinking hehehe!
The World is a Vampire . . .
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