Cost Barrier
Here's some more analysis of my day trading since I changed my trading style, starting Aug 30 2016. Prior to that, I day traded every market day. After the change, I day trade about 50% of the market days.
Every month, between 5% to 9% of my capital goes towards expenses (charges and taxes). To make a profit, I need to earn more than that. This cost barrier is one of the major barriers to profitable trading, and is significantly more in case of day trading than swing trading. I wonder what kind of barriers are faced by scalpers. At some point, when the capital increases considerably, it might even be sensible to move to countries with lower taxation.
Here's some more analysis of my day trading since I changed my trading style, starting Aug 30 2016. Prior to that, I day traded every market day. After the change, I day trade about 50% of the market days.
Code:
Calendar Market Days Gross Net Difference
Month Days Traded Return Return
Aug 2016 2 1 19.57% 19.12% 0.44%
Sep 2016 20 11 29.54% 21.61% 7.93%
Oct 2016 19 9 12.48% 6.03% 6.45%
Nov 2016 21 7 32.21% 26.58% 5.64%
Dec 2016 22 8 13.89% 8.74% 5.15%
Jan 2017 21 9 -6.49% -11.85% 5.35%
Feb 2017 19 7 7.07% 1.56% 5.50%
Mar 2017 22 12 -0.76% -8.92% 8.16%
Apr 2017 18 8 23.31% 18.43% 4.87%
May 2017 22 12 -9.55% -18.12% 8.58%
Jun 2017 21 12 22.61% 14.20% 8.41%
Jul 2017 5 2 11.64% 10.58% 1.06%
Total 212 98 77.81% 37.68% 40.13%
1. Gross return is the MTM return before deducting ant costs. Slippage is already part of MTM.
2. Net return is the return after all broker deducted charges and taxes, including call-n-trade charges. This does not include charges not deducted by the broker, like data feed costs, software license, etc.
3. I have used % to measure returns, though I prefer other measures.
4. The returns shown, especially the total returns, are not very accurate, because I add and withdraw cash from the trading account frequently. If compounded accurately, the returns would be significantly better than those shown here.