Friday, November 20, 2009

What A Difference A Pip Makes.

During the last 5 weeks of trading, I've taken 96 trades and made 24R in pure market movement. I stress that last part because, after commissions, I'm left with just 12 of those Rs.

So, I asked myself the obvious question. Why not avoid the extra cost with a broker who claims to offer "tight" spreads with zero commissions?? The answer is, of course, transparency.

The screenshot I've included with this post shows my TWS platform. The quotes for GBP/USD from a popular Spread Betting platform. A quick look shows that you lose 3 pips on every roundtrip trade using this particular SB platform and under these market conditions (I don't think I've ever seen anything above a 2-pip spread on cable during the European and US sessions on IB's platform). This quickly adds up to far more commissions than I'm paying with IB...

12R in commissions over those 96 trades means an average of 0.125R of every trade has gone towards commissions...with my average stop being approximately 10 pips, that means 1.25 pips (on per trade. So now I'm thinking: What if I could consistently add a pip to my initial targets? How many (if any) of the winners would have become losers due to that extra pip? Would those losses be offset by the new target?

Of course this is all theoretical and difficult to put into pratice if you enter/exit the market using zones rather than fixed prices...but food for thought nonetheless.

This idea reminds me of a brilliant quote from one of the greatest films of all time.

Pressure and Time indeed.


Trader Kirk said...


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Please let me know what you think about this. We don’t give out the link to sign up because we are selective on our partners. So if your interested please let me know and I’ll send you the sign up link. You can email me back at

Thanks for your time in advance!

Anonymous said...

Then you just to need to allow for the price at which you actually get filled, by which point your head starts to hurt too much and you go for the option with the best charts ;-)