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the 25k min for most trading accounts; workarounds?

Discussion in 'Business, Careers & Education' started by Satorialist, Mar 12, 2012.

  1. Satorialist

    Satorialist Senior member

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    I've missed out on numerous trade ideas (options, shorts, FX) which would have paid off handsomely last year, all because I don't have the 25k min requirement needed to trade anything other than long buys.

    Basically, if you don't have 25k tied up in your account you don't get to play the game--you're locked out. Is there any way around this rule? Possibly by going through a normal brick-and-mortar brokerage as opposed to an online brokerage?

    Do overseas trading houses have such draconian rules? There must to be a way around this, it's maddening.
     
    Last edited: Mar 12, 2012
  2. cross22

    cross22 Senior member

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    :puzzled: Which country do you live in? Here in US there is no such limitations for shorting or options trading.
     
  3. CYstyle

    CYstyle Senior member

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    US rules, pattern day traders need 25k in their accounts otherwise they can't trade, if you are on margin

    Honestly with <25k I don't see how one could successfully day trade. The retail broker commissions would be a killer
     
    Last edited: Mar 12, 2012
  4. cross22

    cross22 Senior member

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    Ok that makes more sense. I have no issues shorting or trading options regardless of my balance.
     
  5. Verniza

    Verniza Senior member

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    There are outlets for the retail investors to trade. There are loads of online brokers that offer trading accounts that allows you to even trade with mini contracts. Brokerages such as, FxPrimus, IGmarkets, Interactive Brokers etc do not require 25k.

    They even offer you high leverage. So I don't get you at all.
     
  6. Nereis

    Nereis Senior member

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    I would warn away anyone without at least 50K in capital who plans on day trading, trading derivatives or short selling on a margin.

    You do not have the necessary liquidity from various streams of income/cash to maintain solvent in the face of adverse movements from noise traders.
     
  7. Verniza

    Verniza Senior member

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    Shorting is just the opposite of going long. There is no difference if you take long positions on a margin or short positions on a margin your risk exposure is still the same.

    I agree in that day trading should be avoided until you have sufficient experience. Also derivatives trading should only be attempted if you fully understand the product.

    However none of them have any relation to your amount of capital. You are the GUN and capital are your BULLETS. It is up to you on how to manage and fully utilize your limited amount of bullets to get as many kills as you can. You can be profitable in anything regardless of your amount of capital as long as you have a good strategy, risk management and state of mind.

    The people who go bust from margin are losers who don't know how to manage their risk. Margin is a wonderful tool of maximizing your gains and it doesn't matter how much you leverage, it can be 100:1 or 200:1 you can manage your risk amount per trade to any amount you desire by just placing.....VOILA! A STOP LOSS.
     
  8. Nereis

    Nereis Senior member

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    It's the existence of the stop loss that will kill you if you're short selling something.

    Traders have been known to submit large buy orders just to short squeeze the unsophisticated. In fact, there are algorithmic strategies built around taking advantage of short interest in addition to momentum trading strategies. These are typically large hedge funds who have direct market access and as such will always outspeed us.

    The only securities where long and short positions are always just diametrically opposite sides of the same trade fundamentally are futures and vanilla european options.
     
  9. Verniza

    Verniza Senior member

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    That same logic will apply to people taking long positions as well. So according to you, you may as well lay off trading because hedge funds or market making brokers will hunt your stop loss whether or not you long/short.


    This so called "stop loss hunting" occurs everywhere whether you are trading with a market maker or ECN or interbank market. The only difference is who the market movers are. All you need to do is be smart about it and know how to time your entry. You also need to manage your risk capital per trade. The so called "stop loss hunting" can be overcome with proper risk management. Don't put the blame of your losses to market movers instead learn to adapt to it and time your entries.


    I've never had any problems shorting currency pairs. Sometimes major slippage may occur and hit my stop loss but with proper strategy and risk management it feels more like an ant bite rather than a smack to the face.
     
  10. Nereis

    Nereis Senior member

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    Actually, I'd hope that if you're taking a long position that your fundamental valuation is so sound that it allows you to double up and buy more of the security if the security is falling in price. That cannot be said for short selling, where costs of borrowing can be high and positions closed out prematurely as a result. Hence, why I'd never recommend short selling to anyone who isn't already sophisticated enough to have 50K of capital to cushion losses. The mere case of shorting a stock and not having enough liquidity to double down and not worry about hitting your stop loss will open you up to being squeezed.

    But from what I gather, you're a technical analysis guy who day trades. I'm a fundamentalist and do not use stop loss orders as my delta, beta and commodity exposure can simply be managed with derivatives. I also only close out my trades when the metrics I've valued the security on have changed materially.

    Do remember that the vast majority of traders will crash and burn spectacularly and not even the big players are immune. The hedge fund industry last year had abysmal returns and almost all investment banks worldwide have shut down their proprietary trading desks regardless of where they operate.

    When volatility is the order of the day, leverage is not your friend.

    I'm curious as to what you mean by proper risk management, as I doubt anyone with less than enough to pay down a mortgage is sophisticated enough to understand what hedging is and how to not to lose their savings. Honestly speaking, I've seen too many people with little in their accounts get burned far too often to recommend anyone trade unless they've done it professionally or have the net worth to absorb the losses when they occur.
     
  11. Verniza

    Verniza Senior member

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    Ah I see why our views differ now. You trade stocks while I do currencies. For stocks as there is a set market cap for individual stocks, the price is more liable to plays by big players. I do currencies which has little to no market cap so it requires an insane amount of capital to be able to move the market in your favor.


    Actually on the contrary, I am more of a fundamental trader who utilizes technical charts to refine my entry prices. The stock market and FX market are very different. There is no proper method of gauging the beta of currency pairs. For FX risk management I employ, is mainly calculating your stop loss for the % of capital within my risk tolerance after factoring in leverage and risk-to-reward ratios. Of course there are ways to hedge certain currency pairs as there is correlation between some pairs and commodities. However, that is a step I avoid as hedging usually eats into my profits and I find proper money management more than compensates for my lack of hedging.


    For me, I am still young(20) and have much to learn but my game plan thus far have provided me with good returns.
     
  12. Satorialist

    Satorialist Senior member

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    Signing up for options accounts, for instance, they require you to list net worth, income, etc... it's a bewildering form because it will get rejected if not meeting a certain threshold (which they will not tell you). Anyone know what the thresholds are?

    And by the way, margin accounts are required for trading shorts and using options. Which I find stupid as I have no interest or intention with trading on margin.
     
    Last edited: Mar 13, 2012
  13. jslade

    jslade Senior member

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    Edit

    Nothing to gain.
     
    Last edited: Mar 13, 2012
  14. Superfluous Man

    Superfluous Man Senior member

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    This a pretty results-oriented.
     
  15. stevent

    stevent Senior member

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    +1


    :facepalm:

    You probably only remember the stuff you would have made money on. Plenty you probably would have lost money on. And Interactive Brokers is 10k, even less for students.
     
  16. CYstyle

    CYstyle Senior member

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    But you said you want to trade and you want to short. Think about it. A trade with cash, when you sell it takes 3 days to clear. Your funds are unavailable for 3 days. If you want to trade you need margin so your funds can become available for use right away. Also if you want to short, it's not gonna work without margin. If it were a pure cash thing no margin, if you shorted 10k of blah, and it went up 5% you'd owe your broker $500. What if you don't have $500? The broker would have to close down shop
     
  17. Gamster

    Gamster New Member

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    I've turned $2500 into $13,000 in 13 months day trading from a cash account revolving the money by trading 25% of my balance daily so I have the cash clearing daily from the total equity. If the pattern day trading rule didn't exist I'd be at $200,000 by now easily. This rule only keeps lower income people from becoming successful while allowing the rich to become richer. It takes 4 days for cash to clear so if you use 25% of your portfolio day trading each market day you always have that amount clearing for trading each day. I can beat the pattern day trading rules but can't make the money I could by being limited to my investment amount. This rule makes you either make less money or take on more risk by forcing you to hold positions instead of taking the quick profits. Whoever thought this rule up is a moron.
     
  18. Gamster

    Gamster New Member

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    I can copy and post my trades to prove I am not lying. I have no interest in doing so. I just am looking for a way around the PDT rule and hoping someone can help out. I'll post a week of trades just so you know what I do is for real. Do the math if you wish for my trades this week.
    03/21/14 Sold 10,000 of FITX @ $0.0979 (Order #2715) 971.98 03/21/14 Bought 10,000 of FITX @ $0.0938 (Order #2713) -944.99 03/21/14 Sold 100,000 of UTRM @ $0.0084 (Order #2705) 832.99 03/21/14 Bought 100,000 of UTRM @ $0.008 (Order #2703) -806.99 03/21/14 Sold 200,000 of RFMK @ $0.0044 (Order #2697) 882.99 03/21/14 Bought 200,000 of RFMK @ $0.0042 (Order #2695) -846.99 03/20/14 Sold 10,000 of HYSR @ $0.0535 534.98 03/20/14 Sold 10,000 of HYSR @ $0.0536 (Order #2685) 528.99 03/20/14 Bought 20,000 of HYSR @ $0.0521 (Order #2679) -1,048.99 03/20/14 Bought 74,975 of VMGI @ $0.0121 (Order #2671) -914.19 03/20/14 Sold 74,975 of VMGI @ $0.0139 (Order #2672) 1,035.13 03/20/14 Bought 516,976 of SUTI @ $0.0009 (Order #2669) -472.27 03/20/14 Sold 516,976 of SUTI @ $0.001 (Order #2670) 509.97 03/19/14 Sold 50,000 of REVO @ $0.0108 (Order #2663) 532.99 03/19/14 Bought 50,000 of REVO @ $0.0101 (Order #2661) -511.99 03/19/14 Sold 200,000 of RFMK @ $0.0034 (Order #2657) 672.99 03/19/14 Bought 200,000 of RFMK @ $0.0032 (Order #2654) -646.99 03/19/14 Sold 150,000 of UTRM @ $0.004 (Order #2652) 592.99 03/19/14 Bought 150,000 of UTRM @ $0.004 (Order #2650) -606.99 03/19/14 Sold 900,000 of HNSS @ $0.0011 (Order #2645) 982.98 03/19/14 Bought 900,000 of HNSS @ $0.001 (Order #2644) -906.99 03/19/14 Bought 3,300 of IMDC @ $0.051 (Order #2641) -175.29 03/19/14 Sold 3,300 of IMDC @ $0.058 (Order #2642) 184.40 03/18/14 Sold 15,000 of ERBB @ $0.0608 (Order #2634) 905.73 03/18/14 Bought 15,000 of ERBB @ $0.0599 (Order #2630) -905.49 03/18/14 Sold 1,500 of PHOT @ $0.67 (Order #2627) 997.98 03/18/14 Bought 1,500 of PHOT @ $0.655 (Order #2624) -989.49 03/18/14 Sold 18,000 of ERBB @ $0.0476 (Order #2623) 850.69 03/18/14 Bought 18,000 of ERBB @ $0.0456 (Order #2621) -826.89 03/17/14 Sold 12,000 of EAPH @ $0.0751 (Order #2616) 894.19 03/17/14 Bought 12,000 of EAPH @ $0.074 (Order #2612) -894.99 03/17/14 Sold 1,000,000 of SMVI @ $0.0006 (Order #2610) 592.99 03/17/14 Bought 1,000,000 of SMVI @ $0.0005 (Order #2609) -506.99 03/17/14 Sold 15,000 of EAPH @ $0.0674 (Order #2605) 1,003.98 03/17/14 Bought 15,000 of EAPH @ $0.0642 (Order #2602) -970.74
     
  19. Gamster

    Gamster New Member

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    Even while presented with evidence you continue to display your ignorant comments. I suggest you be ignored and banned from this forum. Your worthless comments don't contribute to anything more than degrading your character.
     
    1 person likes this.

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