The cost nobody budgets for
Every trade has a toll
Exchanges charge a fee on each side — often 0.1% to 0.5%. It sounds like nothing. Trade twenty times and you've paid 4-20% of your capital just for the privilege.
Which is why overtrading kills
A strategy that's mildly profitable before costs can be reliably unprofitable after them. Fewer, better trades beat many mediocre ones — for arithmetic reasons, not philosophical ones.
Check yourself
Fees are 0.2% each way. After 40 round trips, what has it cost you?
- Almost nothing — 0.2% is a rounding error
- Around a sixth of your money
- Nothing, as long as the trades won
Show the answer
Around a sixth of your money — Each round trip costs about 0.4%. Forty of them is roughly 16% — a sixth of your money gone before a single trade has to go wrong.