Hi After 8 months of my first trade I can say that this game is not easy. hahaha. But I like it, sure as most of you. During this months I had experimented a lot of trading issues , fat fingers, beginer mistakes, autoliquidations, and so on. This week I had a couple more problems. My account has been designated as a Pattern Day trader and I have to wait 5 days to be able to open new positions. I didn't know that this exist. I opened an iron condr but with the wrong expiration and i closed it. This led to the restriction. And to make the things more interestings I had a margin call. In order to resolve the situation I usually open new positions, but i coudn't because of the restriction. So I decided to close existing positions. My Broker only gives 10 minutes to resolve a margin violation. I entered 2 combo orders selling stock and buying calls. Mid price. The orders stayed purple color for 2 minutes. Then one of the orders executed but the other becomes light blue. I lowed the price to almost the bid, but the order stayed lihgt blue for minutes. https://www.interactivebrokers.com/en/software/iTWS/iTWS/quickStart/Order_Status_Colors.htm Then the autoliquidation started. I had never seen an order behave like this. The Broker's costumer service explanations were not satisfactory. Another thing to learn about.
I understand Pattern Day Traders are subject to higher margin requirements etc. as well. The rules were introduced by the regulator supposedly to protect the inexperienced client who didn't appreciate the risk accepted in day trading. Its maybe more likely they are to protect the broker, as they find it difficult to off-set the risk of large PDT's on an on-going basis through the day. Even without the regulator's rules, day-traders have in the past been "discouraged" by firms who didn't want to take on the risk of their business.
Take half your money and open a new brokerage account with a different brokerage to go along with current account. You will have half the buying power, but will be able to trade twice as often.
Have you considered moving over to the futures markets? They do not have the PDT rules and you can trade the contracts or options.
You're just delaying the inevitable, it sounds like he would blow his account either way regardless of the PDT rule limitation. He needs to first tackle the root, foundation of his trading abilities and understanding -- or lack thereof. I believe if you switch to a cash account (not a margin account) to trade options, for example, you're not limited to that Pattern Day Trader rule of having under a 25K account. The money clears the next day, no rolling five business day clearing or waiting period for every three straight trades.
Ya. I re-read his initial post and I agree with you. There are some fundamental trading issues that need to be resolved first. Thanks for pointing that out.
The pattern day trader restriction is a problem but will end in a few days. I didn't know that finra rule but now I do and won't happen again. @lawrence-lugar @Traderjohnsblog Well you are supposing so much. I didn't say nothing about my strategies or my options understanding. fundamental trading issues ? I have explained an issue with an order. My account is better now than in the beginning. And I have pay 25 % of my account in comissions. I don't know if that is usual. thanks.
Sorry if we offended you. We are just trying to help. I think we both see a money management issue and that set off big red flags. You should never ever have a margin call. Paying 25% in commissions is also a little concerning but you are using complex options strategies and they will come with higher commisions.
IMHO, that is too much after only 8 months' trading. Essentially your broker is getting rich off you. Perhaps we misunderstood your posts. From OP, you sounded like you were losing money trading, and your account was been auto-liquidated, that was why the advices from lawrence and Traderjohn. They meant well. If you are extremely profitable, then our apologies. You are then obviously doing something right, so, ignore our posts and keep doing what you are doing. Best wishes.
Actually good advice. However, if OP writes options, OP needs to do buy-write or cash secured. Account size matters or OP is back to require margins.