Investing Bankroll

[Sniper]

In poker, you strive to play hands where the odds are in your favor... if you win, the rake is a small percentage that you share with the house.

In trading, if you strive to make trades with the odds in your favor, the same applies... meaning, if you are making winning trades, the commission costs are relatively insignificant.

That said, if you are making a large number of trades, you should strive to minimize your costs, and thus should be using a broker that is charging you less than .01/share each way.

Finally, would you consider playing one poker hand/year, a proper strategy??

[LearnedfromTV]

Sniper - I'll make a longer post later with some of my thoughts on your post, but for now:

My main goal in the above posts was to give the OP a means to calculate what percentage of his investment he would be paying in 'rake.'

I didn't do a very good job of addressing the poker v investing comparison. I just thought it through a bit and will post some more detailed thoughts later (tonight or tomorrow).

[Sniper]

I think your looking at it the wrong way!

Bottom line: Why would you care if you are giving the broker even up to 5% of your profits, no matter how large that is in comparison to your starting year equity?

[LearnedfromTV]

[ QUOTE ]
I think your looking at it the wrong way!

Bottom line: Why would you care if you are giving the broker even up to 5% of your profits, no matter how large that is in comparison to your starting year equity?

[/ QUOTE ]

You wouldn't, if it really were 5% of your profits, even if it were 50%. A winning player in poker can say the same thing. What matters is the net gain.

But I'll indulge you.

If (say) 7K in transaction costs on a 10K beginning equity is really 5% of your profit, then you are capable of turning 10K into 143K in one year. Can I sign up for your newsletter?

(Or if it's 7K on even 100K, 100K ---> 233K.)

[Bet_to_Nguyen]

To answer your first question Sniper, no. Moreover, I can see how that may well be the case for many investment situations.

After reading yours and tv's posts I can see the inconsistences with the rake/transaction fees analogy. I got the answer to my question though. Thanks!