InvestorQ : What are the invisible costs to consider in trading?
priya Shah made post

What are the invisible costs to consider in trading?

Answer
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Shreya Karn answered.
2 years ago


Most traders do not give due consideration to the invisible costs and that can actually be more significant to your profitability than the visible costs. Firstly, if you trade in illiquid counters, you are paying a premium each time you are buying and giving a discount each time you are selling. If you put a monetary value to this cost, then it can be quite big. Secondly, there are costs in terms of the leverage and leeway that your broker allows you.

As a trader, you want to get the maximum leverage that is possible so that you can actually trade in a multiple of your capital. Also you need to ensure that your broker credits the proceeds of sales and the demat purchases on time so that there is no time value loss for you. Lastly, there is also the cost of poor quality of advice by the broker. To get the best of your trading you either need a broker to give you good quality calls or empower you to trade with tools. Quality research and ideas go a long way in empowering you to trade profitably and your focus must be on a broker who can reduce the cost of poor trades. Don’t worry about what the markets are going to do. Worry about what you are going to do in response to the markets.