The PDT rule is holding me back. And it makes no sense.

[wrbtrader]

I am referring to day trading, where it is neccesary to go offshore. All of my experience is with day trading.

And my whole complaint is that offshore commissions are negating my profitability, so that I cannot build up money to get over 25k.

I calculated my commissions with my broker, and I would have to make more than 40% per month just to beat commissions. On a 5k account, my commissions were $1600 in one month.

I too was referring to day trading.

Now that you realized a little too late that you need to make an additional 40% per month to beat commissions on your 5k account...

What's preventing you from going offshore ???

wrbtrader

 

[Risepoint1879]

I too was referring to day trading.

Now that you realized a little too late that you need to make an additional 40% per month to beat commissions on your 5k account...

What's preventing you from going offshore ???

wrbtrader

What are you talking about? I am already offshore, that's the problem.

 

[Handle123]

I have no idea why brokers even want to deal with small accounts, they grip the most or always on phone needing help in something and brokerage wise, very little money coming into the business.

I thought IB had much larger minimums to open an account?

 

[Robert Morse]

I have no idea why brokers even want to deal with small accounts, they grip the most or always on phone needing help in something and brokerage wise, very little money coming into the business.

I thought IB had much larger minimums to open an account?

I can't validate it, but I was told about 4 years ago that the average IB account creates ~$3500/year in gross revenues. That is just under $300/month gross, not net.

 

[JSOP]

I don't understand how the PDT rule is helpful. Even for new traders.

Why is it helpful to force traders to start with such large amounts, before they have learned about risk management, fear, greed, etc.? New traders should be LIMITED to below $5k, not forced above 25k. Money doesn't equal experience.

And for people like me, who have experience, but not 25k, I can't access low commissions to make this a worthwhile venture. I'm stuck paying .012 instead of .0035. (I do scale outs with a $5k account, so I'm losing some cost efficiency.)

How is it helpful to force newbies offshore, where they get eaten alive by overpriced commissions. Sure it's not legal, but they know everyone does it.

This is the rant of a person who is being severely impeded, not helped, by the PDT rule.

When was the last time that rules were created in the financial industry to help the average traders? No, they are always created to serve the "Big Boys". We are lucky that we get to trade with them in the same arena as them. Stocks used to be traded just among the exclusive club of investors just like interbank forex. PDT was really created to discourage daytrading which was blamed for introducing "volatility" in the market. Those "Big Boys" didn't like it that average traders were getting a bigger piece of the pie that was supposed to be theirs.

 

[Buy1Sell2]

I don't understand how the PDT rule is helpful. Even for new traders.

Why is it helpful to force traders to start with such large amounts, before they have learned about risk management, fear, greed, etc.? New traders should be LIMITED to below $5k, not forced above 25k. Money doesn't equal experience.

And for people like me, who have experience, but not 25k, I can't access low commissions to make this a worthwhile venture. I'm stuck paying .012 instead of .0035. (I do scale outs with a $5k account, so I'm losing some cost efficiency.)

How is it helpful to force newbies offshore, where they get eaten alive by overpriced commissions. Sure it's not legal, but they know everyone does it.

This is the rant of a person who is being severely impeded, not helped, by the PDT rule.

Switch to futures. Thank you for your time.

 

[tiddlywinks]

On a 5k account, my commissions were $1600 in one month.

I really can't add to this thread, but IMO, the above comment is very telling.

Your $1600 commissions are on the buying power that your 5k provides. Since you are griping, (maybe the appropriate word is blaming) commissions for the stunted growth you experience by-passing PDT rules, IMO, it is pretty obvious that your strategies are to blame.

I'm stuck paying .012 instead of .0035.

Using your commission numbers of .012 vs .0035, you would still incur about $500 in commissions based on your $1600 number. Using this metric alone, still, 18+ months, assuming no losing months, would be needed to attain the PDT bare-bone minimum. Again, this says something about your strategies. Reality vs Desire.

Don't get me wrong. I am not a fan in any way of PDT rules, or any government-knows-what-is-best-for-me rules. They did the same thing to forex in the US through leverage rules as example. And of course, lower costs for doing business such as lower commissions and fees are certainly in your best interest. But you have not presented numbers that suggest your strategies in their current form, would be profitable even if your gripes are solved.

 

[Risepoint1879]

I really can't add to this thread, but IMO, the above comment is very telling.

Your $1600 commissions are on the buying power that your 5k provides. Since you are griping, (maybe the appropriate word is blaming) commissions for the stunted growth you experience by-passing PDT rules, IMO, it is pretty obvious that your strategies are to blame.



Using your commission numbers of .012 vs .0035, you would still incur about $500 in commissions based on your $1600 number. Using this metric alone, still, 18+ months, assuming no losing months, would be needed to attain the PDT bare-bone minimum. Again, this says something about your strategies. Reality vs Desire.

Don't get me wrong. I am not a fan in any way of PDT rules, or any government-knows-what-is-best-for-me rules. They did the same thing to forex in the US through leverage rules as example. And of course, lower costs for doing business such as lower commissions and fees are certainly in your best interest. But you have not presented numbers that suggest your strategies in their current form, would be profitable even if your gripes are solved.

I'd be very happy with $500 commissions on a $5k account, that would leave me with an acceptable profit.

At the end of the day, there are things I can do, such as do longer trades with bigger stops and profit target. Or get funding to reach 25k. I don't believe in being a victim. But it's annoying when a rule that is supposed to help, makes things harder.

Or as JSOP mentioned, maybe the rules are indeed there to make it harder...

 

[JSOP]

I'd be very happy with $500 commissions on a $5k account, that would leave me with an acceptable profit.

At the end of the day, there are things I can do, such as do longer trades with bigger stops and profit target. Or get funding to reach 25k. I don't believe in being a victim. But it's annoying when a rule that is supposed to help, makes things harder.

Or as JSOP mentioned, maybe the rules are indeed there to make it harder...

It's there to help, the "Big Boys", not us. But looking on the bright side, the market has changed a lot from the hayday of the daytrading back in the late 90's. Today with the HFT and algo trading, there is not as much money that can be made as before from "pattern daytrading" which is what this PDT rule was supposed to discourage. So you are not missing much by not daytrading. Plenty of good profits can still be made via swing trading, trading in other instruments where the PDT rule doesn't apply and etc.

 

[wrbtrader]

What are you talking about? I am already offshore, that's the problem.

My bad...I misunderstood a prior message by you (quoted below). I thought the below quote meant you were going to go offshore when in reality, as you stated you're already offshore.

With that said, looks like your only option is to grow your offshore account > 25k so that you can move it back and then be able to avoid the PDT rule.

Seems like a very difficult task especially with you coughing up that much in commissions. Hopefully your profits were more than your commissions.

Good luck

wrbtrader

...And my whole complaint is that offshore commissions are negating my profitability, so that I cannot build up money to get over 25k.

I calculated my commissions with my broker, and I would have to make more than 40% per month just to beat commissions. On a 5k account, my commissions were $1600 in one month.