3 ms·
There's also time value of money. Paying upfront like this means that money can't be invested (by you), and you lose out on the money plus the return.
by darkerside 2y ago
There's also time value of money. Paying upfront like this means that money can't be invested (by you), and you lose out on the money plus the return.
- dlubarov 2y agoWouldn't that be for fixed-dollar fees? I think here all the costs we're talking about are percentages. I.e. ignoring taxes, the amount I theoretically expect to exit with should look like entry_cost * (return_rate * fee_rate)^T * exit_cost Where return_rate might look like ~1.1, fee_rate might look like 0.9983 (17 bps), and entry_cost and exit_cost might look like half_spread/price (under some assumptions...). So I think this comes down to whether T is large enough for that exponentiation to dominate the half-spreads.