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Learning to Invest / Investing Beginners


Subject:  Re: stocks suggestions needed Date:  9/2/2012  1:14 PM
Author:  trader2012 Number:  26173 of 28535

A big problem with such a small amount of principal is that even if you invested all of that in just one company so as to incur just one commission charge, the $10 in fees would eat up 3.3% of your principal. That's unacceptable. You wouldn't want that commission to be any more than 1%.


Why are you advising him to worry about commissions? If the trade is worth doing, then the cost of doing it is the least of one’s concerns. Getting the direction and timing right are far more important.

Let me give you examples of real trades (i.e., some of my currently open positions) in which the cost of putting them (aka, the commission) was greater than your threshold of 1%. The first column is the commission I paid (typically, $10) expressed as a percentage of the purchase-price. The second is my current P/L . The third is the original commission expressed as a percentage of the current, market value of the position. The fourth i