• Log InLog In
  • Register
Liquid`
Team Liquid Liquipedia
EDT 23:43
CEST 05:43
KST 12:43
  • Home
  • Forum
  • Calendar
  • Streams
  • Liquipedia
  • Features
  • Store
  • EPT
  • TL+
  • StarCraft 2
  • Brood War
  • Smash
  • Heroes
  • Counter-Strike
  • Overwatch
  • Liquibet
  • Fantasy StarCraft
  • TLPD
  • StarCraft 2
  • Brood War
  • Blogs
Forum Sidebar
Events/Features
News
Featured News
[ASL20] Ro24 Preview Pt1: Runway132v2 & SC: Evo Complete: Weekend Double Feature3Team Liquid Map Contest #21 - Presented by Monster Energy9uThermal's 2v2 Tour: $15,000 Main Event18Serral wins EWC 202549
Community News
Maestros of The Game—$20k event w/ live finals in Paris18Weekly Cups (Aug 11-17): MaxPax triples again!13Weekly Cups (Aug 4-10): MaxPax wins a triple6SC2's Safe House 2 - October 18 & 195Weekly Cups (Jul 28-Aug 3): herO doubles up6
StarCraft 2
General
What mix of new and old maps do you want in the next 1v1 ladder pool? (SC2) : Geoff 'iNcontroL' Robinson has passed away The GOAT ranking of GOAT rankings RSL Revival patreon money discussion thread Weekly Cups (Aug 11-17): MaxPax triples again!
Tourneys
Maestros of The Game—$20k event w/ live finals in Paris Sparkling Tuna Cup - Weekly Open Tournament Monday Nights Weeklies Master Swan Open (Global Bronze-Master 2) $5,100+ SEL Season 2 Championship (SC: Evo)
Strategy
Custom Maps
External Content
Mutation # 487 Think Fast Mutation # 486 Watch the Skies Mutation # 485 Death from Below Mutation # 484 Magnetic Pull
Brood War
General
Flash Announces (and Retracts) Hiatus From ASL BW General Discussion BW AKA finder tool Maps with Neutral Command Centers Victoria gamers
Tourneys
[ASL20] Ro24 Group C [Megathread] Daily Proleagues [ASL20] Ro24 Group A [ASL20] Ro24 Group B
Strategy
Simple Questions, Simple Answers Fighting Spirit mining rates [G] Mineral Boosting Muta micro map competition
Other Games
General Games
General RTS Discussion Thread Dawn of War IV Path of Exile Stormgate/Frost Giant Megathread Nintendo Switch Thread
Dota 2
Official 'what is Dota anymore' discussion
League of Legends
Heroes of the Storm
Simple Questions, Simple Answers Heroes of the Storm 2.0
Hearthstone
Heroes of StarCraft mini-set
TL Mafia
TL Mafia Community Thread Vanilla Mini Mafia
Community
General
Russo-Ukrainian War Thread US Politics Mega-thread Things Aren’t Peaceful in Palestine The year 2050 European Politico-economics QA Mega-thread
Fan Clubs
INnoVation Fan Club SKT1 Classic Fan Club!
Media & Entertainment
Anime Discussion Thread Movie Discussion! [Manga] One Piece [\m/] Heavy Metal Thread
Sports
2024 - 2026 Football Thread TeamLiquid Health and Fitness Initiative For 2023 Formula 1 Discussion
World Cup 2022
Tech Support
High temperatures on bridge(s) Gtx660 graphics card replacement Installation of Windows 10 suck at "just a moment"
TL Community
"World Leading Blockchain Asset Retrieval" The Automated Ban List TeamLiquid Team Shirt On Sale
Blogs
Breaking the Meta: Non-Stand…
TrAiDoS
INDEPENDIENTE LA CTM
XenOsky
[Girl blog} My fema…
artosisisthebest
Sharpening the Filtration…
frozenclaw
ASL S20 English Commentary…
namkraft
Customize Sidebar...

Website Feedback

Closed Threads



Active: 3004 users

[G] Investing (part 4)

Blogs > azndsh
Post a Reply
azndsh
Profile Blog Joined August 2006
United States4447 Posts
November 26 2010 22:08 GMT
#1
Understanding Costs
Trading has gotten a lot cheaper and more accessible over the years, so that even people like you and I can make investments without getting eaten up by fees. Still, most people don't even realize that they're losing money to these things.

Commission
This is most likely the largest portion of costs for most people. If you trade in $1000 positions, and each position costs $8 to put on, then you're paying 1.6% to enter and exit each position. This may not sound like a lot, but depending on how often you trade, it does actually add up to a huge amount. Try to find the cheapest brokerage you can.

Taxes
No idea what laws are for other countries, but in the US, you're taxed on your ordinary tax rate for positions that you hold for less than a year. On the other hand, losses can be deducted. For positions that you hold for more than a year, there's a lower, capital gains tax. It makes a pretty big difference, so do your research.

Fund fees and expenses
If you're interested in mutual funds and ETFs, it's important to check how much the fund takes out in expenses and management fees. Morningstar is a good place to look stuff up. Depending on how long you plan on holding it, something like 1% a year really adds up over time.

Bid-ask spread
Let's take Citigroup (C) as an example stock. Say it's trading at 4.11-4.12. That means you can buy at 4.12, but you can only sell it at 4.11. That's a penny loss, which comes out to about 0.24% in this case. It's minor but relatively important to keep in mind for less popular things. The spread can be much wider, especially if you're putting on a larger position, and you should definitely think of that as a cost.

kzn
Profile Blog Joined June 2007
United States1218 Posts
November 26 2010 22:42 GMT
#2
On November 27 2010 07:08 azndsh wrote:
Bid-ask spread
Let's take Citigroup (C) as an example stock. Say it's trading at 4.11-4.12. That means you can buy at 4.12, but you can only sell it at 4.11. That's a penny loss, which comes out to about 0.24% in this case. It's minor but relatively important to keep in mind for less popular things. The spread can be much wider, especially if you're putting on a larger position, and you should definitely think of that as a cost.


I don't understand how this is possible. Isn't the stock market price supposed to reflect the value attached to a share of the stock in question? It doesn't make sense to me that if people are able to sell to me at 4.12, I can't find anyone to sell to except at 4.11?
Like a G6
azndsh
Profile Blog Joined August 2006
United States4447 Posts
November 26 2010 23:12 GMT
#3
If there's someone willing to buy at 4.12 and someone willing to sell at 4.12, then the trades cross until there's either more buyers or sellers. If there are more buyers, then the price becomes 4.12-4.13 because the remaining people are only willing to sell at 4.13. If there are more sellers, then the price becomes 4.11-4.12. For a stock as liquid as Citigroup, there is almost always someone willing to buy millions of shares 1 cent below and sell millions of shares 1 cent above.

I'm not sure what you don't understand. This is pretty much how all financial markets work. The stock market price reflects whatever the heck people are willing to pay for it/sell it at (which in theory should be close to be whatever it's intrinsically worth for whatever that means).

In reality, a lot of trades are probably crossing at 4.115 instead of either 4.11 or 4.12, but that's a whole different ball game that I don't know very much about.
MoreFaSho
Profile Blog Joined May 2010
United States1427 Posts
November 27 2010 00:41 GMT
#4
On November 27 2010 07:42 kzn wrote:
Show nested quote +
On November 27 2010 07:08 azndsh wrote:
Bid-ask spread
Let's take Citigroup (C) as an example stock. Say it's trading at 4.11-4.12. That means you can buy at 4.12, but you can only sell it at 4.11. That's a penny loss, which comes out to about 0.24% in this case. It's minor but relatively important to keep in mind for less popular things. The spread can be much wider, especially if you're putting on a larger position, and you should definitely think of that as a cost.


I don't understand how this is possible. Isn't the stock market price supposed to reflect the value attached to a share of the stock in question? It doesn't make sense to me that if people are able to sell to me at 4.12, I can't find anyone to sell to except at 4.11?

Think of it like buying a bike from the store. The store sits there all day and most of the time people are not buying the $100 bike for $100, they're not buying at all, but if you buy your bike for $100 you shouldn't be surprised that you can't immediately sell it for $100 without waiting quite a long time and taking a risk that the value of the bike will go down over time.
I always try to shield slam face, just to make sure it doesnt work
itzme_petey
Profile Blog Joined February 2004
United States1400 Posts
November 27 2010 08:25 GMT
#5
Not sure if this qualifies as a "cost". Down-ward volatility drag "downward bias" factors into the value of levered ETFs or inverse derivatives. Lets say the ETF goes down 20% one day and then up 20% the other. You have just lost $.04 in value if the ETF was $10 to begin with.

Here is an interesting article about levered and inverse ETF's. Since ETF's arent all safe and some are down right gambling tools.

Levered/inverse ETF's downward bias
"Last night, I played a game.. as I recall it was a strategy game.. Peeked around and what did I see, a girl playing starcraft better than me.. and I jizzed in my pants.."
Please log in or register to reply.
Live Events Refresh
Korean StarCraft League
03:00
Week 79
CranKy Ducklings88
davetesta41
HKG_Chickenman22
IntoTheiNu 12
Liquipedia
The PiG Daily
21:00
Best Games of EWC
Serral vs Cure
Classic vs Solar
PiGStarcraft529
LiquipediaDiscussion
[ Submit Event ]
Live Streams
Refresh
StarCraft 2
PiGStarcraft529
RuFF_SC2 116
Nina 66
PiLiPiLi 12
StarCraft: Brood War
ggaemo 243
Sexy 80
Leta 73
NaDa 54
Jaeyun 19
Icarus 9
Dota 2
monkeys_forever871
NeuroSwarm122
League of Legends
JimRising 652
Counter-Strike
Stewie2K174
Super Smash Bros
amsayoshi36
Other Games
tarik_tv13367
summit1g7851
shahzam527
C9.Mang0488
ViBE241
Trikslyr41
Organizations
Other Games
gamesdonequick912
BasetradeTV39
StarCraft 2
Blizzard YouTube
StarCraft: Brood War
BSLTrovo
sctven
[ Show 15 non-featured ]
StarCraft 2
• Berry_CruncH56
• Sammyuel 2
• Kozan
• AfreecaTV YouTube
• intothetv
• sooper7s
• IndyKCrew
• LaughNgamezSOOP
• Migwel
StarCraft: Brood War
• Azhi_Dahaki14
• STPLYoutube
• ZZZeroYoutube
• BSLYoutube
League of Legends
• Lourlo461
• Stunt202
Upcoming Events
CranKy Ducklings
6h 17m
SC Evo League
8h 17m
WardiTV Summer Champion…
9h 17m
Classic vs Percival
Spirit vs NightMare
CSO Cup
12h 17m
[BSL 2025] Weekly
14h 17m
Sparkling Tuna Cup
1d 6h
SC Evo League
1d 8h
Replay Cast
1d 20h
Afreeca Starleague
2 days
Queen vs HyuN
EffOrt vs Calm
Wardi Open
2 days
[ Show More ]
RotterdaM Event
2 days
Replay Cast
2 days
Afreeca Starleague
3 days
Rush vs TBD
Jaedong vs Mong
Afreeca Starleague
4 days
herO vs TBD
Royal vs Barracks
Replay Cast
4 days
The PondCast
5 days
Replay Cast
5 days
LiuLi Cup
6 days
Cosmonarchy
6 days
OyAji vs Sziky
Sziky vs WolFix
WolFix vs OyAji
BSL Team Wars
6 days
Team Hawk vs Team Dewalt
BSL Team Wars
6 days
Team Hawk vs Team Bonyth
Liquipedia Results

Completed

Jiahua Invitational
uThermal 2v2 Main Event
HCC Europe

Ongoing

Copa Latinoamericana 4
BSL 20 Team Wars
KCM Race Survival 2025 Season 3
BSL 21 Qualifiers
ASL Season 20
CSL Season 18: Qualifier 1
Acropolis #4 - TS1
CSLAN 3
SEL Season 2 Championship
WardiTV Summer 2025
Esports World Cup 2025
BLAST Bounty Fall 2025
BLAST Bounty Fall Qual
IEM Cologne 2025
FISSURE Playground #1
BLAST.tv Austin Major 2025

Upcoming

CSL Season 18: Qualifier 2
CSL 2025 AUTUMN (S18)
LASL Season 20
BSL Season 21
BSL 21 Team A
Chzzk MurlocKing SC1 vs SC2 Cup #2
RSL Revival: Season 2
Maestros of the Game
EC S1
Sisters' Call Cup
IEM Chengdu 2025
PGL Masters Bucharest 2025
Thunderpick World Champ.
MESA Nomadic Masters Fall
CS Asia Championships 2025
Roobet Cup 2025
ESL Pro League S22
StarSeries Fall 2025
FISSURE Playground #2
BLAST Open Fall 2025
BLAST Open Fall Qual
TLPD

1. ByuN
2. TY
3. Dark
4. Solar
5. Stats
6. Nerchio
7. sOs
8. soO
9. INnoVation
10. Elazer
1. Rain
2. Flash
3. EffOrt
4. Last
5. Bisu
6. Soulkey
7. Mini
8. Sharp
Sidebar Settings...

Advertising | Privacy Policy | Terms Of Use | Contact Us

Original banner artwork: Jim Warren
The contents of this webpage are copyright © 2025 TLnet. All Rights Reserved.