Periodically, I like to help customers with things that are outside the price action methods I teach. This week I’d like to discuss commissions and execution. Even though we can’t control market direction or volatility, there are certain aspects of trading we can control.
The first of these is commission. In today’s environment, we consumers have the luxury to be more selective in whom we choose to do business with (brokers). The next variable is the choice of trading platform; and considering today’s technological advances, there is an ever-increasing amount of choices. The next variable is cost. Keep in mind that most expensive or cheapest option is not necessarily the best. Consider your individual needs – are you a day-trader, swing trader, do you need charts or just data? Determine what’s best for you, and by all means, don’t be cheap. The long-term costs of “inexpensive” brokers, trading software, etc. is usually much more expensive in the long-run, beyond the hidden costs.
Firstly, you have to be wary of guys advertising .49 cents or .99 cents per execution. Obviously, they’re forgetting to mention the additional cost of clearing and execution fees. The last (but by no means least) variable to consider is execution. Here we have two factors to consider
In terms of execution, the perfect trading software does not exist. Glitches do occur. Some platforms are more stable than others. Data feeds are equally as important. Besides the trading platform itself, we need an accurate and stable data feed: one that does not “go down”, is FAST and without delay. Believe it or not, there are some data feeds that are delayed and that is why at times traders experience high slippage on their trades. We as traders can’t afford instability and delayed data because this will “eat” into our profits.
I recently switched completely to the Rithmic Data Feed, for use with NinjaTrader. I’ve found that Rithmic is an institutional type data feed with VERY low latency. It exactly mirrors the market, quotes exactly and delivers bids/offers/trades in milliseconds. Rithmic has its own data center where they host their equipment right on the server on their exchange. They use high-end equipment to ensure stability. My connection rarely goes down and the data feed is superior to anything that I have ever used in the past.
My recommend brokerage firm is Optimus Futures (http://www.optimusfutures.com). Optimus recommended that I switch feeds and go with Rithmic; a suggestion I can’t thank them enough for making. Matthew, my boker, gives me $4.00RT / all fees included and does not impose any quota minimums when it comes to trading. I highly suggest using his services. When it comes to brokers, I try to stay as objective as possible. However, I’ve found the combination of Rithmic’s low-latency service combined with Matt’s excellent services to be the best broker / feed combination.
As an experienced trader, I’ve been around enough to know the difference a fast data feed and a professional broker can make.
Here is Matt’s contact information:
Optimus Phone #, toll-free: 800-771-6748
Optimus Phone #, (local – Boca Raton, FL, USA): 561-367-8686
Matt can also be reached directly at [email protected] if you have any questions.