I'm currently a part time trader, and have only been trading for about two months. I'd like to work with more money than I currently have and I know you need the $25,000 to be considered a day trader by the SEC standards. My question is about the settlement time with trades. Right now I'm working with the three day settlement using a cash account and I'm not getting very far considering I can really only trade about twice a week. I want to borrow money from my mother to work with on top of what I have now. If I have about $30,000 in my account, and I use 6,000 on my first trade (meaning I dipped below the 25,000) will I have to go back to waiting for the three day settlement and not be able to touch that money? I know about free rides and I know about margin trading (but I don't have a margin account so I'm not sure I understand it completely), but I guess I'm asking for a real world example to cement my understanding. I want to spend my days trading several times a day instead of once. Would I have to use only the $5,000 I have above the $25,000 or could I use more and not have to worry about settlement times?
Newbie question
- Thread starter AllisonD
- Start date
With what I say here I am not trying to discourage you from pursuing your goal in any way, shape or form â BUT I am trying to caution you immensely
You are literally standing over a 3 mile deep ocean filled with hungry sharks..... covered in blood, holding an anchor â and only barely scratching the surface
IMO â It is a very bad idea to borrow money unless You and your Mother are âcompletelyâ willing to flush that money away â and forget about it forever
PDT (Pattern Day Trader) â Yes you need $25K cash minimum â always in your account â then youâre allowed to trade as much as you want per day with 4X leverage
However there will be commissions and fees with each discrete trade (entry and exit)â¦.oh and did I mention those pesky losses which never seem to go away â yea there is those to deal with too
$30K in the account, trade $6K overnight, - yes you will be limited the next day to trading only the remaining cash in your account, however if your overnight position is down (you will have less cash to trade due to the unrealized loss)
Rhetorical questions
Are you fully aware of what youâre getting into?
Are you willing and able to take my money consistently⦠Because I will take your money â in a heartbeat⦠and I know how.
Are you a day trader or swing trader â make sure you clearly know â and stick to itâ¦
Day traders, if they are smart do not hold overnight position⦠fwiw I held an overnight position one once last year â lost ~ $13K before the mkt even opened the next day⦠You ready for thatâ¦â¦
If you fancy yourself a day trader â then what type are you⦠scalper, momo, trading pullbacks, buying weakness, selling strength, breakout, trend, gap, etc, etc, etcâ¦â¦ Possibly even a buy/ hold/ hopeâ¦., or picking tops/ bottoms day trader
Except for the last two each of these takes a certain skill set, and experience to make money at consistently... and btw the last two â are just plain idiotic
Possibly you may want to rethink your current pathâ¦. Then step back and gain some more experience before coming into our playground - please
Work to save up the necessary money, use the time to gain screen time (experience), both skills will be of immense benefit I promiseâ¦. By then possibly youâll have a better understanding and appreciation of what youâre trying to accomplish..
And please know the mkt will be there waiting when you are better prepared
Otherwise knock yourself out â I can always use your money
Just food for thought from a dumbass trader
RN
You are literally standing over a 3 mile deep ocean filled with hungry sharks..... covered in blood, holding an anchor â and only barely scratching the surface
IMO â It is a very bad idea to borrow money unless You and your Mother are âcompletelyâ willing to flush that money away â and forget about it forever
PDT (Pattern Day Trader) â Yes you need $25K cash minimum â always in your account â then youâre allowed to trade as much as you want per day with 4X leverage
However there will be commissions and fees with each discrete trade (entry and exit)â¦.oh and did I mention those pesky losses which never seem to go away â yea there is those to deal with too
$30K in the account, trade $6K overnight, - yes you will be limited the next day to trading only the remaining cash in your account, however if your overnight position is down (you will have less cash to trade due to the unrealized loss)
Rhetorical questions
Are you fully aware of what youâre getting into?
Are you willing and able to take my money consistently⦠Because I will take your money â in a heartbeat⦠and I know how.
Are you a day trader or swing trader â make sure you clearly know â and stick to itâ¦
Day traders, if they are smart do not hold overnight position⦠fwiw I held an overnight position one once last year â lost ~ $13K before the mkt even opened the next day⦠You ready for thatâ¦â¦
If you fancy yourself a day trader â then what type are you⦠scalper, momo, trading pullbacks, buying weakness, selling strength, breakout, trend, gap, etc, etc, etcâ¦â¦ Possibly even a buy/ hold/ hopeâ¦., or picking tops/ bottoms day trader
Except for the last two each of these takes a certain skill set, and experience to make money at consistently... and btw the last two â are just plain idiotic
Possibly you may want to rethink your current pathâ¦. Then step back and gain some more experience before coming into our playground - please
Work to save up the necessary money, use the time to gain screen time (experience), both skills will be of immense benefit I promiseâ¦. By then possibly youâll have a better understanding and appreciation of what youâre trying to accomplish..
And please know the mkt will be there waiting when you are better prepared
Otherwise knock yourself out â I can always use your money
Just food for thought from a dumbass trader
RN
Stock trades take 3 days to settle no matter how you trade or in what account. A margin account just allows you not to worry about it. So if you want to day trade then you need a margin account.
In order to satisfy the PDT rule you need to maintain 25K in your account at all times, it doesn't mean that you can only use 5K that is above the 25K to trade. You can trade using the whole 30K, however, if your total balance falls below 25K (i.e. you lose more than 5K) then you'll either have to put up more cash or you will no longer be able to day trade.
call your broker and have someone explain the PDT rules to you. your broker takes your commissions so they are paid to assist you. if your broker not willing or not patient to explain to you, change a broker.
http://en.wikipedia.org/wiki/Pattern_day_trader
http://en.wikipedia.org/wiki/Pattern_day_trader
To answer your questions, I've read 9 books on trading since about February. I'm on number 10 now. I've also been watching the markets since then and learning technical analysis as I go. I do know what I'm getting into and I have had a few losses so far, but much more gains than losses. I'm very disciplined and have been using my stops. I have never held a trade over night. I do know what I'm getting into and I know I have MUCH more to learn, but I don't plan on taking huge risks until I learn even more and see when I'm ready.
Three big things I have picked up from my readings:
1. never hold a trade over night unless you're willing to lose it all.
2. always protect your principal
3. know when you're getting in and getting out and stick to it
I've listened and learned and I apply these principals in my trading which has been great thus far.
If I had to categorize myself as a day trader, I'd say I'm a scalper.
Honestly, I didn't want to use all the money in the account, I was thinking if I kept using a very small portion of it, I'd fare better overall. Like maybe only using a quarter or less of it. Which is really why I'm asking the question, to see if it's possible to trade that way with the 30,000. I'm just wondering how it would work out if I wanted to do a few small trades a day that way. But thank you for the words of caution, but I'm a big girl and I can handle myself.
Quote from AllisonD:
To answer your questions, I've read 9 books on trading since about February. I'm on number 10 now. I've also been watching the markets since then and learning technical analysis as I go. I do know what I'm getting into and I have had a few losses so far, but much more gains than losses. I'm very disciplined and have been using my stops. I have never held a trade over night. I do know what I'm getting into and I know I have MUCH more to learn, but I don't plan on taking huge risks until I learn even more and see when I'm ready.
Three big things I have picked up from my readings:
1. never hold a trade over night unless you're willing to lose it all.
2. always protect your principal
3. know when you're getting in and getting out and stick to it
I've listened and learned and I apply these principals in my trading which has been great thus far.
If I had to categorize myself as a day trader, I'd say I'm a scalper.
Honestly, I didn't want to use all the money in the account, I was thinking if I kept using a very small portion of it, I'd fare better overall. Like maybe only using a quarter or less of it. Which is really why I'm asking the question, to see if it's possible to trade that way with the 30,000. I'm just wondering how it would work out if I wanted to do a few small trades a day that way. But thank you for the words of caution, but I'm a big girl and I can handle myself.
Well Ma'am
Come on in the waters fine.... and Welcome
Note to self (One these days ah gots ta read me a tradin book) :eek:
Regards
RN
For 2K, you can open a margin account. You won't be able to day trade, but stocks settle the same day, so you can sell one stock and buy another on the same day. You can trade it into a 25K account, and then start your day trading.
The water still looks kinda bloody to me. And I am never comfortable with that giant eye looking at me from below. Is that you RN????