Day trading is definitely one of the hardest things that somebody can do, and the optimal way to do it is to have a well-capitalized account and some practical experience in riding the intraday lightning.  The obvious financial issue is that not everybody can afford to drop 25K+ into a trading account to get day trading privileges, and the experience issue ends up being a “chicken or the egg” scenario. I like and recommend this method most because it forces you to be more discriminating in your trading choices.  If you see a number of mediocre setups one day, you are more likely to pass on them and wait for more optimal ones on another day since your dry powder is limited. So let’s say that you have only 10K to trade with, and you are dead set on day trading (…you know there are things called “swing trading” and “position trading” too).  You can split your funds in half and open two accounts with two different brokers.
By doing this you will effectively be able to do six day trades on a rolling five-day basis (once again only with 2x margin buying power), which should be more than enough for a beginning trader. In the past this would be an awkward way to execute trades, but the ease with which you can now open accounts, transfer money, and trade online makes it definitely a viable option. Same set up as above but if you insist on having an almost unlimited ability to day trade a sub-25K account, this method will appeal to you.
Obviously you will incur some extra costs as you will have four commissionable events instead of two, as well as a bit of slippage depending on the width of the spread on the stock you are trading.  Because of this, I suggest you only use this method if you are trading with a per share commission set up. I have never used a prop shop myself but know traders who have.  I have heard good and bad stories, so if you choose to go this route, make sure you fully investigate them and get some references before you commit. There are no day trading restrictions on futures and since you are only required to put up a small percentage of your overall contract size, leverage is more than you will need. No matter how hard you want to day trade with a sub-25K account, be forewarned that futures are a very, very tough and specialized asset class, and only a small number of new traders will ever be consistently profitable with them. Like futures, forex has no day trading restrictions and ample leverage for small account traders.  There has also been a proliferation of resources for learning about forex trading over the last few years. Currencies have their own set of challenges.  They do not trade like equities, however many traders feel that they do more closely respect the “rules” of technical analysis. I played the game for about 6 months, and each time I played I managed to at least triple my money (except for 1 month where I purchased a stock too quickly, and failed to notice that the stock had extremely low-volume of trading (one trade every few days to a couple of weeks), and had to sit on that investment until it was traded again at a higher ask price).


So, starting with $2,000, I would be able to roll that into over a MILLION DOLLARS in just about half a year!!! I agree (new trader here) but is their a good way to make a fair amount of money starting with 2 grand. I find it hilarious that you say to anyone that even attempts to trade GC or CL to simply hand them your money. The majority of people will tell you something like ; there is no arbitrary strategy in trading. I have never shared my strategy with anyone either;therefore i know what i am saying is absolutely correct. Your opinion on sim trading sounds equally as ignorant as those idiots that don’t believe in technical analysis. Yeah whatever… i use my 3 day trades every week and make 20-30% with my account on penny stocks.
This of course also begs the question if you should devote time to day trading if you don’t have enough capital to do it. Thanks Brian, I feel a little bit validated to hear that a pro suggest what I stumbled upon a couple years ago. For anyone wanting to trade Forex with a small account has to learn what happens when you have 100:1 leverage and a central bank intervention move happens and you are positioned wrong.
That being said, I still don’t think the split account method is illegal, and certainly not for somebody trading 100 shares against their own account to make it flat.
In both cases, you can exit both the stock and options positions the next day, or just sell one off according to your directional bias on the stock. I didnt realize you could use the 2nd account for it’s 3 day trades within a 5 day period.


If your wise about your trades you could put on 200-300 in trades per day and make, say 10% of the investment after commissions. And since options settle in one day this can be a very attractive tool for the beginning day trader who has limited funds. A cash account, which comes with no margin (a good thing, I think), allows day trades without limits. But apart from that not losing money, smaller trades to build the account and real discipline.
I just use a good stock screener, find $1-4 dollar stocks with massive volume, recent gains of 10+ % and good looking 1,3,6,y chart patterns. He can trade at night and he won’t pay commissions to the firm, just for the privilege of losing his money there. Assuming your system continues to work you now have about 16k after year two and by year three you can start day trading in a margin account as you’ll have more than the requisite 25k.
It’s like telling someone who wants to become a poker pro to play poker once a week when he can get his buddies together, instead of playing online, where he can play thousands of hands per day. By year 4 or 5 you should be able to day trade full time and earn more than you were making at whatever job only allowed for 2k to start trading with!



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Comments

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    20.03.2013

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    20.03.2013