I have done day trading with paper money but used real time quote (level 2) for the past atleast 7 months. I know the risk involved in it, but i want to give it a try with real money. The broker i was dealing is an LLC with a pool of money. They give me1:10 buying power with min 5k to start(no 25k requirment) but the problem is the commission. They charge me $0.06 for 100 stocks (buying&selling). I am good at low price stocks, but i have to do big volumes, then i have to pay more commision with the current broker. Anyone here knows a day trading firm charges low commission or charges commission per trade rather than volume?. I checked with Ameritrade and scottrade, they don’t give good buying power and they need $25k min for day trading and even worst it takes 3 days to clear the funds. Any other brokers?
Thanks in advance for the help
Nick
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4 Comments
IF you’re going to use your real, hard-earned money, there is no skating around the $25K requirement. EVERY broker abides by it. Its an SEC rule.
You ARE allowed to make 3 day trades in any rolling 5 day period. AS SOON AS that 4th trade is attempted, you are tagged as “a pattern day trader”. Your account is frozen. You take your bumps and lumps, which aren’t any fun, and there isn’t a darn thing you can do about it.
With $5K, you can swing trade as much as you like.
Thanks for asking your Q! I enjoyed answering it!
VTY,
Ron Berue
Yes, that is my real last name!
All broker/dealers are covered by the same rules & regulations.
To trade on paper is one thing to trade for real is something else. When you say buying power it means you have a margin account. Basic margin rules are established by the Federal Reserve, all brokes are subject to the same rules.
In addition exchange member firms have rules established by the exchange.
If you are buying low priced stocks, no B/D can give you buying power on stocks selling less than $5 a share..
The $25000 is rule applies to all day traders regardless of the firm. AND the 25 rule states that you must have a minimum equity at all time of $25,000
It doesn’t take three day to clear fund, your totally confused between trade date and settlement day. All books & records are posted on a Settlment Date basis.
If you sell something that is not paid in full, your account is restricted for 90 days or until money is received for the purchase. You sale money is not due you until settlement date and it can not be used to cover the purchase
Welcome to the real world, you spent a lot time, trying to learn to trade, but you never learnt the rules. You can’t have one without the other.
They are the best for me.
check it out
If you are trading in the US, there is no getting around the pattern day trader rule. It doesn’t matter which broker you use.
Also Reg T is at 50% which means the best you can do is a 1:2 buying power. Most firms have higher requirements for some stocks. Scottrade has a list.
A 1:10 leverage would be to risky even for me.
I am a day trader, but I never really put “their money” at risk. I always have a cash reserve. While true I buy on margin so 50% of the money belongs to Scottrade…. if I need to I can cover the whole transaction.
If you hadn’t said you used Level 2 quotes I would have thought you were dealing in penny stocks. I know the rules are more relaxed and many things go under the radar, but not dealing in pennies I have no real knowledge.
Many of my friends who are activity traders usehttp://www.thinkorswim.com
I am thinking about changing, as Scottrade has been very slow in execution lately, and timing is everything in day trading.
It wouldn’t hurt to ask their policy but I doubt it is different.