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Yet another newbie day trading questions
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Yet another newbie day trading questions

  #1 (permalink)
Trading Apprentice
Atlanta, GA/USA
 
Futures Experience: Beginner
Platform: None
Favorite Futures: stocks
 
Posts: 2 since Apr 2014
Thanks: 0 given, 0 received

Yet another newbie day trading questions

How I got interested (You can skip this):
There was a stock market competition at my college, so I decided to play the simulation game for fun without having any trading knowledges. I found out later during the game that I was day trading (or pattern day trading) without knowing that a day trading concept actually exists. I ended up winning the competition.

Questions:
1. I only have $6000 to begin with. I would most likely be classified as a Pattern Day Trader which will require me to hold at least $25K. Is there a way to bypass that? (I understand the PDT rules)
2. Which broker would be good for day trading penny stocks? (I am not familiar with OTCBB and OTC)
3. Is it possible to short penny stocks? As in stocks priced between $2 ~ $5?

I am aware of risks and the amount of time I would have to put in. I am fine with losing all of my money, and playing in the stock market was fun though the simulation game is probably dramatically different from reality.



The game that I played.
Image link: s.vpr.es/f/18c811de0e/


Last edited by jp94; April 12th, 2014 at 06:20 PM.
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  #2 (permalink)
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  #3 (permalink)
Trading Apprentice
Colorado Springs, CO, USA
 
Futures Experience: Intermediate
Platform: thinkorswim
Favorite Futures: futures
 
Posts: 12 since Apr 2014
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I don't know of any way to bypass the PDT rules. They are there for a reason. You can always open an account and trade until they determine you are a PDT, they won't require the $25k until are determined to be a PDT.

I don't trade penny stocks, so I don't know what broker would be best (try google, it's your friend).

Also, a quick search on finviz shows 839 stocks under $5 that are shortable. Whether or not you can actually short them is another story and will depend on your broker.

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  #4 (permalink)
Elite Member
Austin, TX
 
Futures Experience: Intermediate
Platform: F-16CM-50
Favorite Futures: JDAM
 
tturner86's Avatar
 
Posts: 5,781 since Sep 2013
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Unless you have a margin account it will take 3 days for your stock sales to settle, so you may only be able to trade one or two times a week.

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  #5 (permalink)
Trading for Fun
Sydney, Australia
 
Futures Experience: Advanced
Platform: Xtrader
Favorite Futures: Commodities
 
Posts: 78 since May 2012
Thanks: 31 given, 101 received

The hardest thing when you short penny stocks is actually getting access to shares to short. As you can only short them if the broker has them available to short.

I think interactive brokers is your best best.

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  #6 (permalink)
Trading Apprentice
Chicago, IL
 
Futures Experience: Intermediate
Platform: Lightspeed
Favorite Futures: ES
 
Posts: 16 since Jun 2014
Thanks: 1 given, 0 received

You just need to find a prop firm. There are TONS out there. Most require a minimum of $5k and give you 10:1 leverage. Won't be able to short penny stocks and more than likely buy them either. I wish I could short them. Only way to but penny stocks is retail firm but they have their own capital requirement limits too.

There are many firms that you can deposit 5-6k and trade with. AMERITRADE. ETrade. Etc you will need 25k though. Otherwise you will need to wait T+3 for your stocks to settle. Can't trade that way for sure!

But trust me, there are plenty of prop firms that you can open an account with to trade with what you have.

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  #7 (permalink)
Trading Apprentice
Atlanta, GA/USA
 
Futures Experience: Beginner
Platform: None
Favorite Futures: stocks
 
Posts: 2 since Apr 2014
Thanks: 0 given, 0 received

I realized that trading IRL is easier than the virtual competition I competed using MarketWatch.
I was studying abroad, so I made an account with Schwab which they opened up a margin account for me along with a debit card. Starting with 5K, over a week, I attained 11K through purchase of NEWL at $1.06 before launch (jumped 350% in one day) and several other companies. However, I got a margin call due to PDT. I got scared, so I attempted to hold a stock overnight which did not work well with total losses amounting over 2.2K... so I have 8.9K with 4.9K gain over 4 business days. I've never held stocks overnight while playing the virtual competition.
I decided on pausing until my friend who has over 20K would open a "partnership" account to bypass PDT margin calls. My school is known for high workload, so even during study abroad, it was very hard for me to keep up with school while watching stocks.

I've traded on margin once for testing, and I think they gave me 2:1(?) leverage but took some interests. As a day trader, I think trading on borrowed money is very risky.

My question now lingers on how shorting really works. I am trading stocks with high volume, so I assume that there are plenty of stocks to short with 10K. However, I did hear that shorting = borrowing, and that may mean that I might be additionally charged. To play safe, I think $10 trading commission is enough. I did get approved on Optionshouse, but it's way too laggy here.

I haven't checked back on this post, but thanks for replies!!

Have fun trading


Last edited by jp94; June 2nd, 2014 at 07:14 AM.
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  #8 (permalink)
Trading for Profit
Birmingham UK
 
Futures Experience: Intermediate
Platform: Meta + TradeInterceptor + FXCM
Favorite Futures: DAX ( GBPAUD if moving )
 
Posts: 336 since May 2014
Thanks: 7 given, 64 received

The $25K pattern day trader rule when it came in, 1999 area was it ?? ruined my Stock Trading which was doing very well, but short of that number

If you want to daytrade these days ( for me ), DAX ( GER30 ) is where it's at, with 6K you could do so with a futures account, or a Forex account like FXCM which lets you trade it ( 1 pip spread here via FXCM )


I was a damn good penny trader, good times, but you'll make loads at times and others will disapear on you over night, fun, not long term income replacement.


Penny Stocks, ( anything sub $5 ), won't let you short or use margin anyway, the 25K rule only stops you using Margin and therefore shorting, so none margin account you can trade away till your hearts content, longs only.

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  #9 (permalink)
Elite Member
Salt Lake City Utah/United States
 
Futures Experience: Intermediate
Platform: NinjaTrader
Favorite Futures: Gold
 
Posts: 15 since Jun 2014
Thanks: 2 given, 9 received

The 25K is only needed in day trading stocks. Interestingly enough it is not needed for futures accounts. I started trading futures many years ago for that very reason. Now I have enough to day trade stocks, but I still enjoy the futures markets more. But make sure you understand how the work, they are different.

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  #10 (permalink)
Trading for Profit
Birmingham UK
 
Futures Experience: Intermediate
Platform: Meta + TradeInterceptor + FXCM
Favorite Futures: DAX ( GBPAUD if moving )
 
Posts: 336 since May 2014
Thanks: 7 given, 64 received



TraderLJW View Post
The 25K is only needed in day trading stocks. Interestingly enough it is not needed for futures accounts. I started trading futures many years ago for that very reason. Now I have enough to day trade stocks, but I still enjoy the futures markets more. But make sure you understand how the work, they are different.

I went Forex for the same reason, shame I was better at stocks, I don't see Forex / Futures as being anything other than daytrading and I'm a better swing trader via stocks.


Stocks take up a lot of time in prep work as there are 1000's of them to screen and check, these days 2 charts M1 is way easier, so swings and roundabouts.

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