* I take no account of commissions. I have no idea what your transaction costs are.
* I assume liquidity. That means that I assume equal ease of entry into a position as well as exit from a position. Oh, and by the way, ease of exit is far more important than ease of entry. I assume a narrow bid/offer spread as well.
* I assume full execution of all orders. Meaning that I do not account for partial fills or slippage (being filled at a different price than intended). Don't forget, to avoid this I always counsel using limit orders and never market orders.
* I do not factor in your cost of money. By that I mean that I assume you may borrow and lend money at the same rate.
* I take no account of tax consequences. Obviously, I have no way of knowing your tax bracket and taxation is very far from my area of expertise in any case.
Of course, in real life the markets are anything but frictionless. None of this makes the strategies you read less illustrative but honesty compels me to remind everyone of my assumptions.
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The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.
Posted-In: Markets Trading Ideas
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