In the world of algorithmic trading, many traders turn to artificial intelligence (AI) to make informed investment decisions. However, it is important to consider the impact of trading fees on AI model performance in trading. Trading fees can significantly reduce the profitability of a trading strategy, especially in high-frequency trading, where many trades are executed every day.
Trading fees have a significant impact on the final result
Trading fees come in different forms, including brokerage fees, exchange fees, and taxes. Brokerage fees are charges by the broker for executing trades, while exchange fees are charges by the exchange for accessing its platform. Taxes are levied by the government on profits made from trading.
To get an accurate picture of AI model performance in trading, it is important to consider the impact of trading fees. This can be done by backtesting the model, including trading fees in the calculations. Backtesting is a simulation of the performance of a trading strategy using historical market data. By backtesting the model with trading fees included, traders can get a more realistic idea of the performance of the strategy.
In addition to backtesting, traders can also use forward testing to evaluate the performance of a trading strategy. Forward testing is the process of applying a trading strategy to real-time market data, which can give traders a better understanding of how the strategy would perform in live trading conditions. When forward testing, it is important to include trading fees in the calculations to get an accurate picture of performance.
At OpenTrader.AI, our models are tested with trading fees included. Binance offers the lowest trading fees of 0.075% when paying fees with BNB. Since trading fees have a significant impact on long term results, OpenTrader.AI always makes sure that you pay the lowest fees. We have built a tool that automatically pays fees with BNB by automatically paying fees with BNB, even if you do not have BNB in your wallet.
In conclusion, it is essential to understand the impact of trading fees on AI model performance in trading. By considering the impact of fees when backtesting or forward testing a trading strategy, traders can get a more accurate picture of the performance of their AI models. By considering all trades, including both successful and unsuccessful trades, traders can avoid survivorship bias, and get a more accurate picture of the performance of their AI models.