Is a $5000 Questrade TFSA trading account cost effective? - Part 1

I recently talked about the benefits of a Questrade TFSA trading account. In this series of posts, I will take the other side of the debate. That is, to answer this simple question, with a \$5,000 initial deposit, is a TFSA trading account a cost effective means to allocate your asset? Part 2 and Part 3 of this series discuss my derivation of a spreadsheet to do the job. Part 4 is the conclusion along with a free interactive spreadsheet that I made so that you can get your own results with a few keystrokes. The first step in any trading or investing is to consider your costs. After all, trading is a business and your bottom line is well... your bottom line (cue eye rolls). Every penny added to your costs means that you'll just have to perform that much better to overcome it. Easier said than done. As such, here is my cost analysis in response to my previous post about the Questrade TFSA trading account, in particular. Feel free to use this as a guideline for your own cost analysis if you're considering opening a Questrade TFSA trading account (affiliate link) yourself. We each have our own unique financial picture so this cost analysis is merely a peek from my personal perspective. Here goes my calculations and rationales. The minimal commission on stock trades is \$5 at Questrade. A \$5 commission may not seem much to most people. But consider this. For a \$5000 account, \$5 is 0.1%. On a basic single-lot round-trip (buy and then sell, all shares at once) trade, the total commission is \$5 x 2 = \$10. Thus, I will be 0.2% behind in my account on each and every trade! Yes, 0.2% is a small number. However, take a look at my trading log from my recent forex trades and you'll see that I made more than 10% in 4 months by taking 0.2% here and 0.3% there. In fact, if we consider the statistics frommy best forex trading month last year, my average net profit percentage per trade is 0.12%. I totalled 4.19% net profit on that particular month by raking in a lot of those +0.12% trades. As you can see, a 0.2% commission would effectively break my profitable system. So conclusion #1. I cannot trade my TFSA with the same trading strategy as my forex trading. In other words, no aggressive day and swing trading. In my next post in this cost analysis series, I will see if I can find an cost optimal risk amount to use per trade in a Questrade TFSA trading account. And if I can't justify it, well, bye bye TFSA trading!