As a trader, we often hear market professionals emphasize the importance of “discipline” to indicate trading strategies that helps to minimize heuristic factors such as behavioral influences and emotional decisions.
While these are lesson 101 that is easy in theory, it is something which is difficult to implement in practice.
We tend to often engage in irrational behavior when we are put to a test that is challenging. Most traders tend to deviate from their strategies they have put in place and hold on to losses significantly longer than positions that are in the black. The psychological factor of just waiting for another day or two before it bounces back up always come to haunt them back when everything else has ended.
Understanding this limitation of requiring a trading discipline that is so critical for success, Lim & Tan Securities has recently launched the Intra-Day Active Trader Program (ATP) to meet the discipline needs of a daily trader.
What is the Intra-Day Active Trader Program (ATP)
The Intra-Day Active Trader Program (ATP) is an exclusive program launched by Lim & Tan Securities that allow traders to trade US and HK shares at a special commission rate of 0.07% and 0.12% respectively.
While the low commission rate is just an icing on the cake, the fact that no pre-funding of accounts required is the real deal that makes the difference.
US Shares ATP
The US ATP brokerage rate of 0.07% (minimum of U$10) is applied to counters bought and sold within the same trading day with a minimum of 2 US online intra-day contra trades.
For example, if you decide to purchase 100 shares of Apple on day 1, and 60 shares are sold on day 1, only these 60 shares qualify for the ATP rates. These will be counted as 1 US online intra-day contra trades for the purpose of determining the minimum of 2 US online intra-day contra trades. Remember that you will need to fulfil a minimum of 2 online intra-day contra trades in order to qualify for the special ATP rates.
The US ATP brokerage rate is applicable for trades up to USD30,000 and if you intend to purchase above that, it will be subjected to the usual normal rate of 0.3%. But this should not be an issue to most day traders as the cap limit given is pretty generous in my opinion and should suffice your day trade appetite. Alternatively, you can always break up your order to remain below USD30,000 per order.
If you are intending to short US Shares on ATP, you will have to do so on a separate US Short ATP account.
The reason for this is because Lim & Tan Securities require clients to close their short positions within the same US trading day by the designated time (defined as 10 minutes before market close). Short positions that are not closed by the client by the designated time will be subject to forced buy-in by Lim & Tan Securities with both legs subject to the standard US 0.3% commission fees.
HK Shares ATP
The HK ATP brokerage rate of 0.12% (minimum of HKD80) is applied to stock quantities that are opened and closed within the same trading day. You also need to online trade at least 2 different HK stocks intra-day in order to meet the minimum 2 HK intra-day contra trade criteria.
For example, if you decide to purchase 100 shares of Alibaba on day 1, and 60 shares are sold on day 1, only these 60 shares qualify for the ATP rates. These will be counted as 1 HK online intra-day contra trades for the purpose of determining the minimum of 2 different HK online intra-day contra trades. Remember that you will need to fulfil a minimum of 2 online intra-day contra trades and a separate counter that is different from your first order in order to qualify for the special ATP rates. In this case, you will need to purchase another 100 shares of say JD, and then sell them within the same trading day in order to qualify for the special brokerage rates.
For HK orders, do note that there is an amalgamation of orders for HK shares traded on the same day and because of this if you buy and sell the same counter (for example Alibaba) twice on the same day, it will just be counted as one amalgamate order.
The HK ATP brokerage rate is applicable for trades up to HKD200,000 and if you intend to purchase above that, it will be subjected to the usual normal rate of 0.25%. Again, this is unlikely to be a deal breaker to most day traders as the cap limit given is pretty generous in my opinion and should suffice your day trading appetite.
The first thing that caught my eye while reviewing this is why in the world are they charging commission fees when there are a few others today which are offering seemingly lower or even free commission brokerage rates.
However, one needs to consider that those charging lower brokerage rates require up-front Cash, the Lim & Tan ATP does not and allows no-collateral Contra trading. Secondly, for those who put up SGD cash collateral at other firms, you may be charged FOREX conversion on the full USD or HKD traded value on both your opening and closing trades, whereas for contra trading only your profit or loss difference after the contra is subject to FOREX if you choose the SGD settlement. This is a significant cost saving since most FOREX conversions can amount anywhere from 0.05% to 0.50% in fees.
Also, when you deep dive and look into it, you will soon realize how miniscule it is to make a difference in your trading plan.
Taking an illustration of Apple (Nasdaq: AAPL), if you decide to trade Apple under the US ATP and purchase 100 shares at $128, the brokerage fees will be applied at minimum USD10 x 2 (buy and sell) to you, which will make your total average costs become $12,820. What this means for traders is that you will need to sell Apple at least above $12,820 in order to make a profit (above the break-even point).
Even so, Apple intra-day movement is usually +-$2 such that the brokerage fees will almost be negligible to your trading plan.
Additionally, I find the ATP a really suitable program for people who engage in day trading.
In the beginning of the article, I mentioned about a factor that is very important to traders and that is discipline. With ATP, you are technically “motivated” to open and close your trading positions within the same day in order to minimize your losses and make the most out of your trading strategies. In a day when the market seems to react irrationally against your strategy, this can actually help you dictate discipline into your trading plan.
Over time, this is one habit which you can ingrain and take with you to strategize for bigger things.
One way you can play this is to look for companies that is near the strong support and look to bounce off the support on an intra-day basis. By establishing the support as your entry price and keeping an appropriate stop-loss below that, you can get a higher probability conversion into profits while minimizing your losses low if the stock continues to go down broader.
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In summary, the ATP is a program launched to target daily traders with no pre-funding amount required who are looking to capitalize the movement of the stocks within the day. The lower commission encourages traders to close within the same trading day, establishing discipline into their trading plans and this should work in favor over the long term period for day traders.
If you are interested to explore, do sign-up over at their website here and start your trading experience.
Disclaimer: This is a collaboration with Lim & Tan Securities (a security brokerage firm I have used for over 10 years) on their latest product. All opinions stated above are purely mine.