This is a very common problem for traders, I imagine everyone goes through it at some stage in their career. In working with student traders over years, I have noticed a phenomenon that I think explains one of reasons for this lack of discipline. When I watch student traders trade, they tend to sit very patiently and explain to me what they are seeing on chart in front of them. When they see a valid setup come along, they can quite happily tell me what setup is and how they plan to trade it, and subsequently they will execute trade accordingly. When same student is trading alone, they start taking all sorts of off-plan trades, setups that aren’t really setups at all. It seems that difference when trading alone, is that trader suddenly has no accountability. If they have someone looking over their shoulder keeping them in check, everything is fine. They know that if they take an off-plan trade then they will have to explain to me why they did so when it all goes horribly wrong. Trading at home alone, trader is accountable only to themself, and they are probably not going to give themself same hard time I would if they didn’t follow their trading plan to letter!

The Cost of Going Public

The average cost for a traditional U.S. Securities and Exchange registration and listing on Over-the-Counter Bulletin Board (OTCBB) has risen to about $1,500,000 in 2003. If your company wants to list on Nasdaq, cost will be an additional $500,000. Registration and listing costs have risen by about 30% in past two years thanks to stock scandals that have significantly increased GAAP audit costs and increased regulatory compliance requirements that resulted from Sarbanes-Oxley Act.

The Reasons that Costs of Being Public Have Increased

Section 404 of Sarbanes-Oxley Act addresses accounting control issues for U.S. Domestic public companies. Section 404 requires increased corporate responsibility and accountability. This means increased financial disclosure that results in increased audit and liability-insurance costs.

Being Public in 2003

The legal, accounting and other costs of being public rose to an estimated average of $2.86 million for OTCBB firms in 2003. Major public companies paid, on average, $7.41 million to trade on Nasdaq, AMEX and NYSE, according to a survey by Foley & Lardner LLP.

The Foley & Lardner 2003 survey breaks down 2003 costs as follows:

OTCBB Firms, which they call small public companies

Director and Officer Insurance$850,000 Accounting$824,000 Legal$468,000 Board Compensation$313,000 Lost Productivity$160,000 Other Sabanes-Oxley costs$100,000 Governance Setup Costs$147,000 TOTAL$2,862,000

Nasdaq, NYSE, AMEX firms which they call large public companies

Director and Officer Insurance$2,200,000 Accounting$1,200,000 Legal$ 841,000 Board Compensation$ 247,000 Lost Productivity$2,500,000 Other Sabanes-Oxley costs$ 246,000 Governance Setup Costs$174,000 TOTAL$7,404,000