Total Cost of Ownership in Trading

The total cost of ownership in trading is the comprehensive measure of all expenses incurred to execute and manage a trading strategy. This includes explicit fees, implicit costs like slippage and market impact, the cost of technology and data, and the human capital involved in development and management.

For arbitrageurs, this metric is vital for evaluating the long-term viability of their operation. It goes beyond the cost of a single trade to include the infrastructure needed to maintain a competitive advantage.

By understanding the total cost of ownership, traders can make informed decisions about whether to continue a strategy or invest in better technology. It provides a holistic view of the business of trading.

Managing these costs is as important as finding profitable trades.