Calculating the “deduction rate” in investment behavior is very important, but it seems difficult to understand the “deduction rate” in stock trading.
In reality, in spot trading, if there is no counterparty, the transaction cannot even be completed, so is there no deduction rate in the first place? It is understandable that.
In margin trading, you need to be aware of this “deduction rate”.
When you analyze the data, you will realize that it is truly significant.
The “deduction rate” in stocks is the structural cost due to the difference between the so-called “ask price” and the “buy price”.
If the so-called “tick price” is small, the difference in the price seems large.
For example, if there is a stock with a stock price of 500 yen and a tick price of 0.1, if the difference in the price is 0.3 yen, the cost of one transaction is 0.3 yen.
If the stock price moves 3% to 515 yen, the “deduction rate” is 2%, since it is 0.3 yen compared to 15 yen.
If you place a new order and settle it before the price moves by 1 yen, the “deduction rate” will be 30%.
If you repeatedly trade with a “deduction rate” of 30%, there is no way you can win unless you have a really good strategy.
The calculation of the deduction rate is based on the relationship between the stock’s price movement (tick volume), the difference between the bid and bid price, and the ratio to the stock price, so it is possible to determine to a certain extent how likely it is to win with a particular stock.
