Effect of Commissions on Next AIM Buy Price and Amount

(Next SELL calculation results are similar, in the opposite direction.)

All calculations were made using the AIM Stock/ETF Buy/Sell Calculator Program.

Note that while these are the "first possible" transactions given the parameters specified, you may want to wait for a larger move from your last transaction and/or NET price.

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Blogger is not preserving the format of the AIM transaction calculation below, so see the FAQ at Effect of Commissions on Next AIM Stock/ETF Transaction Buy Prices and Amounts.

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Minimum Order: $120.00
Shares Held: 500
PoCo: $4000.00
SAFEs: 10%

Buy and Sell Commissions: $0 ("classic" or by-the-book [BTB] AIM)

Exact: Buy 17.38 shares at $7.05 (net price $7.05000)

Rounded: Buy 17 shares at $7.05 (net price $7.05000) <<-- Buy and Sell Commissions: $7.00 Exact: Buy 16.67 shares at $7.06 (net price $7.47988) Rounded: Buy 17 shares at $7.06 (net price $7.47176) Buy and Sell Commissions: $12.00 Exact: Buy 15.94 shares at $7.07 (net price $7.82280) Rounded: Buy 16 shares at $7.07 (net price $7.82000) <<-- Notice that while the transaction price difference between $0 and $12.00 commissions is only $0.02, the NET difference is $0.77 (11%). ====================== Minimum Order: $250.00 Shares Held: 500 PoCo: $4000.00 SAFEs: 10% Buy and Sell Commissions: $0 ("classic" or by-the-book [BTB] AIM) Exact: Buy 37.37 shares at $6.81 (net price $6.81000) Rounded: Buy 37 shares at $6.81 (net price $6.81000) <<-- Buy and Sell Commissions: $7.00 Exact: Buy 35.75 shares at $6.83 (net price $7.02578) Rounded: Buy 36 shares at $6.83 (net price $7.02444) Buy and Sell Commissions: $12.00 Exact: Buy 34.97 shares at $6.84 (net price $7.18314) Rounded: Buy 35 shares at $6.84 (net price $7.18286) <<-- Notice that while the transaction price difference between $0 and $12.00 commissions is only $0.03, the NET difference is $0.37 (5%). ====================== Blogger is not preserving the format of the AIM transaction calculation above, so see the FAQ at Effect of Commissions on Next AIM Stock/ETF Transaction Buy Prices and Amounts.

Other related articles are at the AIM Stock/ETF Trading Articles.

AIM Calculator Commission Default Settings

I noticed a $5.00 difference in the transaction cost of a stock BUY transaction the other day.

Good news, I was pleasantly surprised to see that Scottrade has reduced their LIMIT ORDER commissions to $7.00, to the same rate as their MARKET ORDER commissions.

With AIM, I am concerned with the NET transaction price per share, not just the order price.

AIM Fixed Commission Handling.

So this is good news.

I'm changing the default commissions of my AIM Stock/ETF Transaction Calculator from $12.00 to $7.00. Make sure your defaults are whatever your broker charges for limit orders.

(This is assuming you pre-calculate your buy and sell orders and put in GTC LIMIT ORDERS with your broker to sell some when the stock rises to your limit price, or to buy some when the stock declines to your limit price.)

BTW, I add a few pennies to the sell commission, as an estimate of what the transaction tax amounts to.

Hello -- Introduction

This blog will have notes and posts from me and users about the investing method described at Core Position Trading Overview.

About Buy Low Sell High with Core Position Trading (CPT)

Core Position Trading (CPT) as defined here is the buying and selling of increments of a stock, ETF, mutual fund, precious metals holding, whatever, with the object of increasing over time both the amount of the item and the amount of cash in the account dedicated to that item.

CPT is not an "all-or-nothing" method. Usually, a core position of the item is maintained at all times, and the buys and sells are usually of small amounts relative to the total holdings of the account.

Automatic Investment Management (AIM) is a CPT method popularized by Robert Lichello.

His book How to Make $1,000,000 in the Stock Market Automatically! was first published in 1977 and is now in its Fourth Revised Edition (December 2001). It's available on Amazon.com for about $8.00. [2009-06-20]

Don't let the "hokey" title put you off. It details his intriguing method of "forcing" you to "buy low sell high".

This blog and resources discuss the finer points of Core Position Trading, and especially of AIM as discussed and used by me and others.

Contact Buy Low Sell High with Core Position Trading (CPT)

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Thanks for your interest; I'll be in touch soon.
DB

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