Comments on: Reader Query: Should I Choose Lower Commissions over Wash Trades http://www.canadiancapitalist.com/reader-query-should-i-choose-lower-commissions-over-wash-trades/ Helping you invest and prosper Sun, 12 Feb 2012 00:54:40 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: FourPillars http://www.canadiancapitalist.com/reader-query-should-i-choose-lower-commissions-over-wash-trades/#comment-77584 FourPillars Wed, 07 Nov 2007 12:46:56 +0000 http://www.canadiancapitalist.com/2007/11/06/reader-query-should-i-choose-lower-commissions-over-wash-trades#comment-77584 I'll agree with CC and CI - cheaper trades are probably better for most accounts. Currency conversion was something I didn't really consider when choosing a broker (Questrade). For an rrsp they are competitive but if you have a large non-reg account then IB might be a better choice because of lower forex costs. Mike I’ll agree with CC and CI – cheaper trades are probably better for most accounts.

Currency conversion was something I didn’t really consider when choosing a broker (Questrade). For an rrsp they are competitive but if you have a large non-reg account then IB might be a better choice because of lower forex costs.

Mike

]]> By: CanadianInvestor http://www.canadiancapitalist.com/reader-query-should-i-choose-lower-commissions-over-wash-trades/#comment-77555 CanadianInvestor Wed, 07 Nov 2007 10:51:20 +0000 http://www.canadiancapitalist.com/2007/11/06/reader-query-should-i-choose-lower-commissions-over-wash-trades#comment-77555 A few thoughts: - new money, assuming it is coming from Canadian$, always has to incur the FX charge to US$ so there the trade cost is the key - the smaller the amount to be rebalanced, the more the impact of the trading cost since the FX cost (CC's estimate of 0.9% is close enough) will remain constant but the commission of $10 on a $200 trade is 5% cost while on a $2000 trade it is 0.5%; the tracking portfolio I have on my blog shows that since May this year on a $100,000 portfolio with 15 holdings, my rebalancing trades would mostly be in the $300 range - I'd be better off with cheaper trades - the FX costs will dominate trading costs when the portfolio total reaches large amounts like $500k+ and when rebalancing is infrequent, like once per year or less Beyond that, I have heard hints that the wash trade problem will be going away fairly soon as at least one brokerage (and no doubt the others will soon follow) will introduce US$ cash holdings within registered accounts. Hooray! A few thoughts:
- new money, assuming it is coming from Canadian$, always has to incur the FX charge to US$ so there the trade cost is the key
- the smaller the amount to be rebalanced, the more the impact of the trading cost since the FX cost (CC’s estimate of 0.9% is close enough) will remain constant but the commission of $10 on a $200 trade is 5% cost while on a $2000 trade it is 0.5%; the tracking portfolio I have on my blog shows that since May this year on a $100,000 portfolio with 15 holdings, my rebalancing trades would mostly be in the $300 range – I’d be better off with cheaper trades
- the FX costs will dominate trading costs when the portfolio total reaches large amounts like $500k+ and when rebalancing is infrequent, like once per year or less

Beyond that, I have heard hints that the wash trade problem will be going away fairly soon as at least one brokerage (and no doubt the others will soon follow) will introduce US$ cash holdings within registered accounts. Hooray!

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