Ok I just read the blurb at the US government web site. So how does that affect me if I have an online trading account with a minimum startup balance of $1000. What's there to stop me from executing a day trade if the money's in my account?
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Questions about eTrade
- Thread starter hooyacrusty
- Start date
Ok I just read the blurb at the US government web site. So how does that affect me if I have an online trading account with a minimum startup balance of $1000. What's there to stop me from executing a day trade if the money's in my account?
Quote from hooyacrusty:
As I mentioned before I'm a beginner, and my only experience is through paper trading. So, I only want to start with the smallest trades possible. If I don't make any money to begin with that's fine as long as I don't loose a whole lot either.
Assuming you plan to trade 100 shares at a time, why would you choose to pay between $7.00 - $13.00 at Etrade, when the same trade would cost you one dollar at MBT?
Quote from hooyacrusty:
Thanks for the link, but commisions > $0.005 per share won't suit my trading strategy.
- Spydertrader
It not a question of executing a trade (and the holding period, day versus multiday is irrelvent), its a question of how often you can recycle that money. Just because you sell a stock doesn't mean you get the proceeds instantly (to trade with again).Quote from hooyacrusty:
Ok I just read the blurb at the US government web site. So how does that affect me if I have an online trading account with a minimum startup balance of $1000. What's there to stop me from executing a day trade if the money's in my account?
Here is a notice I found posted that was from an eTrade customer (from eTrade I would assume):
Thu Dec 04 00:03:24 2003 Important NYSE Cash Account Trading Rule
Because you are a brokerage customer with a cash account, we want to make sure you are aware of the New York Stock Exchange trade settlement rules that apply to you.
All stock trades in your cash account are subject to T+3 settlement. In other words, if you sell shares of stock held in your account, according to NYSE Rule 431, you may not use the proceeds to purchase another security until three market days after the trade (i.e., the date the initial trade settles). Option trades are subject to T+1 settlement.
If you wish to use the proceeds to trade sooner, you may apply to have your cash account (excluding custodial accounts for minors, IRAs, and other retirement accounts) upgraded to a margin account by submitting our Margin/Option Account Upgrade form.
Quote from winter:
This might help you as well: https://www.tradingdirect.com/Static/Help/cash_acct_trading.pdf (Item #2)
Apologies if you are already familiar with how this works, it did not sound like you are but I could have misunderstood.
Thanks, I've started reading it. It clears up a few missunderstandings.
Sure, it usually comes as a shock to most folks the first time they are told about it because its not intuitive unless you understand the settlement process.Quote from hooyacrusty:
Thanks, I've started reading it. It clears up a few missunderstandings.
The only way to avoid it is to open a margin account instead of a cash account. The deposit requirements for a margin account are much higher though.
Quote from Spydertrader:
Assuming you plan to trade 100 shares at a time, why would you choose to pay between $7.00 - $13.00 at Etrade, when the same trade would cost you one dollar at MBT?
- Spydertrader
How about 5000 shares at 0.10 per share. It goes up to .11 and I sell. I make $50 minus buy and sell commisions. At eTrade thats $10X2 = $20 so I still come out ahead. If the rate is .005 like at MBT then the commision is going to be $50. IB would be cool, but like I said, I want to just try something easy to begin with.
MBT offers flat rate $9.99 trades as well.Quote from hooyacrusty:
How about 5000 shares at 0.10 per share. It goes up to .11 and I sell. I make $50 minus buy and sell commisions. At eTrade thats $10X2 = $20 so I still come out ahead. If the rate is .005 like at MBT then the commision is going to be $50. IB would be cool, but like I said, I want to just try something easy to begin with.
Please don't tell me that you are really planning on trading penny stocks like that example you gave.
Quote from hooyacrusty:
How about 5000 shares at 0.10 per share. It goes up to .11 and I sell. I make $50 minus buy and sell commisions. At eTrade thats $10X2 = $20 so I still come out ahead. If the rate is .005 like at MBT then the commision is going to be $50. IB would be cool, but like I said, I want to just try something easy to begin with.
Oh! My apologies. I didn't realize when you said, "I want to place the smallest trades possible," you actually meant, "I want to scalp trade 5000 share blocks of penny stocks." Good Luck with that business model. One final piece of advise though: make sure you can afford to lose that initial $1000 USD account you open up with Etrade because you won't have your money very long with such foolishness.
Good Trading to you.
- Spydertrader