Could someone please write a professionally written petition at http://www.petitiononline.com/petition.html to help stop this new sec rule from going through. It only takes a few seconds to sign, and we can spread the link around for the next several months through numerous chat rooms and message boards. Thanks in advance.
New Daytrading rule in September 01'
- Thread starter huby
- Start date
Hi everyone. I'm new to the board and also new to daytrading. I wanted to start trading in the next few weeks but after reading this thread I had to alter my plans slightly. Since I don't have $25000 what I intend to do is to still open up and account with IB with $5000. I will do only a maximum of 4 daytrades/week. This will allow me to get in some "seat time" while I save up for the rest of the $25000. Until then I can at least study and learn about the market, trading etc. and still do some daytrades (just as long as I don't surpass 4/week) to test the waters. So my question is, does the approach I'm taking comply with the SEC rule (from what I understand it does but maybe I'm overlooking something) and also do the more experienced traders out there think this would be an ok plan ?
Thanks for any respones.
Thanks for any respones.
be advised that i believe the rule reads "FOUR OR MORE" round trips in "ANY 5-DAY PERIOD"
which is *not* 4 trades per WEEK
basically, you have to think of it as no more than 3 trades per any 5-day block.
IE: I wouldnt be suprised if you get tagged as a daytrader making 3 trades on friday and then 1 on monday
which is *not* 4 trades per WEEK
basically, you have to think of it as no more than 3 trades per any 5-day block.
IE: I wouldnt be suprised if you get tagged as a daytrader making 3 trades on friday and then 1 on monday
chauncey,
In my opinion, novice traders who don't have sufficient capital (25K) should concentrate more on multiday swing trading instead of pure daytrading. If you are allowed only 3 daytrades a week it is just not possible to daytrade and if this rule starts to be seriously implemented this is something that new undercapitalized traders will have to learn to live with. However multiday swing trading is viable trading option and with proper use of stop losses and trailing stops it is the next best thing.
In my opinion, novice traders who don't have sufficient capital (25K) should concentrate more on multiday swing trading instead of pure daytrading. If you are allowed only 3 daytrades a week it is just not possible to daytrade and if this rule starts to be seriously implemented this is something that new undercapitalized traders will have to learn to live with. However multiday swing trading is viable trading option and with proper use of stop losses and trailing stops it is the next best thing.
tiki,
Thanks for pointing that out.
michaelday,
Swingtrading over a number of days has crossed my mind. After reading some literature on trading over the past few months it seemed that a daytrading style would better suit my personality. But you make a good point and I will most likely indeed need to adopt different trading strategies, such as swingtrading, to work around this new rule. Or at least until I come up with $25000
.
Thanks for pointing that out.
michaelday,
Swingtrading over a number of days has crossed my mind. After reading some literature on trading over the past few months it seemed that a daytrading style would better suit my personality. But you make a good point and I will most likely indeed need to adopt different trading strategies, such as swingtrading, to work around this new rule. Or at least until I come up with $25000
. Here is the problem. Suppose that you enter a swing trade on Monday and a stop loss is triggered. Then you enter another trade on Monday for which another stop loss is triggered. On Tue, the same thing happens twice again. On Wed, the same thing happens again. In short, you get stopped out on six swing trades within three trading days and GOOD BYE margin!
The biggest problem for under capitalized swing traders will be to obey stops for the fear that they will lose their margin buying power. How is this for additional risk?
I am not personally affected by this rule, but I am furious about it. The irony is that this law was fully supported by the online brokers. They saw dollar signs. Think about it, four to one margin means twice the buying power, which means a realistic 10%-30% increase in tickets, hmmm.
They made our(their) bed and now we(they) have to sleep in it. They cannot protest something they supported all hearty.
In Feb 2000 (I was only paper trading back then), I met with Bill Griffeth from CNBC, and I explained to him my point of view on the proposed "heaven-sent-to-traders" changes in margin regulations. This is what he told me, "Bill, the only way to protect the small investor is to take him out of the game completely, and I am all for it." He wouldn't give the time of day to explain nor invite me to his "power lunch" show.
The best skill I have is that I know people very well. I made a living as a private investigator. I know how the general person thinks and acts. There is nothing in this rule change that protects people from themselves. On the contrary, it just gives them more reasons to hurt themselves even more.
Bill
Well... one option is to daytrade at will until then. By October the market could be good for longer holds. Who knows? Gary Smith did well enough trading mutuals once a month or so... wannabe traders can do it with indexes. Maybe it's a better idea I just don't like them telling me I'm too stupid to manage my money.