Well, I won't go into the details but a sudden financial emergency (not due to trading) has taken the trading acount down below 25K (but not by much - I am at 23K). I've been a regular member and contributor here for about a year, but wanted to post this under a 'nom de plume' instead. Lately I've been having mediocre results and have been wanting to spend more time paper trading and developing/honing a better technique so I guess I got my wish huh? Now I have no choice since I am limited to only going long, no margin and 3 round trips per 5 days. Now, here's the request: Any 'good suggestions' on a technique for slowly getting the account back above 25K through trading? What would you do? Someone wag claimed I should check out KK as it always lagged behind and moved in lock step with some index. It will be several months before I can fund the account out-of-pocket to bring it back up, so I will be trying to identify some candidates for my 3-times-a-week trades. Truly, the trend is your friend motto is really before my eyes now! Please, save the comments like "if we knew the safest, surest method we would all be doing it". I just want to make very small, but very positve steps back to 25K with (obviously) continued great caution. I realize the chances of success of day trading from an account with a (seriously underfunded) balance close to 25K are pretty slim, but I at least have to get back to 25K, right? Baby steps and patience should get me back to 30-35K within 3-6 months. And no, I'm not giving up trading before I've really started- I'm not a giveup kind of person. The odds are against me but so what? The success that I have someday will be just that much sweeter, no? I am very determined to not be another 'failed day trader' statistic despite the current bleak circumstances. Most folks here have always been helpful and I wish to thank you in advance for that help. 'Underfunded Uncle'
well not easy but here goes. Just trade less volatile stocks and look for long term moves, breakouts, set ups etc. If you want to be real conservative then hedge yourself with a put and away you go.
I had a bad week last week due partially to overtrading, so this week I decided to do one and only one trade per day (or none if I didn't find a setup I liked). Starting with that assumption gave me quite a bit more clarity and made me look for an ideal setup. I didn't feel pressure to find setups. I didn't feel pressure to take a not-quite-perfect setup. During this week I was up every day except today (took a very small stop). I think if you handle this experience properly, you will look back on it as a great learning experience. I would recommend this to anyone that thinks they are overtrading. It also is great for discipline. After my trade each day, I would see setups that looked great, but I would force myself to not trade them. MY RULE FOR THIS WEEK WAS ONLY ONE TRADE PER DAY. ALWAYS FOLLOW YOUR RULES. Don't look at it as "I have to get my account back up over 25k, so I need to make some trades". Set up a good set of rules and follow them. If you do that the account will grow. Sorry if this is a bit off topic. Just wanted to share the great experience I had this week in hopes it would help someone else.
down_not_out, Why do you say you're limited to only going long and no margin? You can still have a margin account with only 2K in your account; only difference is you'll get 2 to 1 instead of 4 to 1.
It would do EVERYBODY some good, not just you, if you said who you are. The whole psycology, ups and downs, traps, attitudes, etc we have all experienced. It would help you and the rest of us to know where you're coming from IMO.
I may be wrong but 25 k requirement is useless rule set by sek which sucks so much to small traders..Don't ask where is the pain.......I doubt if there was enough academic research before this rule was justified and implemented....it appears SEC rule on 25k for PDT is more biased towards bigboys...You are encouraged to remain in buy side while big boys are shorting them....Small traders have restricted financial freedom by disallowing them to short bloated stocks....Will this rule ever change? I don't know. May be you have to write to your congressman. Still financial system is not transparent, yet. If you have a future account, you can day trade them and there is no 25k requirement, etc.
>Any 'good suggestions' on a technique for slowly getting the account back above 25K through trading? What would you do? I try to deal with this pain in the neck rule in the position trading room all the time. Since Iâm a swingtrader who holds a lot of trades overnight, I didnât think it would be a big deal. Au contraire... The big killer I found was the hidden in the normal win/loss cycle in my trades. Folks would do fine during a streak of winners since these profitable trades were open for a couple of days. But as soon as a few stops showed they would get shut out. Since Iâm buying support, and selling resistance, my failures would stop out in the same day. So as soon as the losing streak was played out, and the biggest gains were on the horizon, they had to sit there and watch as the positive results showed. The suck factor was extreme. So, just dropping back to a daily based swing will not get you out of the SECâs do gooder clutches unless you pick trades that are likely to take several days to stop. The other way to deal with this rule is to just accept that you only have 3 trades a week, and just be super super picky. Wait until the hourly index charts show a reversal setup, then go looking for a stock that is also ready to reverse itâs 60 min. Then drop to a 5 or 15 min and scalp a 1 to 1 move, surfing the deep pocket buying. With patience, you should be able to get a very high hit rate. The last possibility is to position trade weekly charts. My favorite style, they offer some wonderful moves, but your only going to see 1 to 2 quality setups a month so again patience is a factor As if trading itself was not difficult enough, the gov makes you jump through flaming hoops too! Arenât you glad they are trying to save you from all this nasty trading risk?? Best of luck to you! Just be sure to spread your 3 trades out over the week, so you donât get stopped out on a rough day and miss the trending days. Good Luck and Good Trading, -Bo Yoder
As much as the rules really suck, and are quite obviously the work of the big guys, we probably will never win the battle to change them. But, what about shifting funds to several brokerages? If you have 23K, then splitting it into two or three accounts will double or tripple the trades per week. It is not wise to be trading all the capital at once anyway, so trading should not be too negatively impacted. This is probably against the rules, but who cares.