Hi, im 18 and have had a scottrade account for about a year. I have been very interested in daytrading and am lucky enough to start learning so young. My problem is that i only have 1500 and commissions obveously eat me alive. I know i will probably lose more money by trading and most would recomend that i invest in etf's or mutual funds or something but i want to learn. There is no better way to learn and get experience than by trading for real. My current cash account will not allow me to trade because it says i will get a "free ride". I plan on opening a margin account when i save enough for the 2000 minimum at scottrade. However, i remember reading that a 25,000 minimum balance is required to "daytrade" so will i still have to wait for funds to settle as in my cash account? My question is- am i on the right track to setting up the correct account for me? and does anyone have any advise on what to do regarding brokers and financing? thanks a lot and sorry for the poorly written explanation of my position but its late and just want to get this question out to you guys. thanks a lot
Sorry I had a brain freeze. I for some reason thought we were only dealing with futures. I know nothing about stocks other than my broker losing me 50k in 1 week. I called it quits in the 90's.
I am in your same situation. The commissions are terrible at discount brokers until you have enough capital to open with a place like interactive brokers. Even though I am loosing money especially with commission. I see it as a valuable experience and I learn from every trade. I do not day trade since their are restrictions but I swing trade from time to time. You will definitely learn a lot more by taking actions and It's hard to see many young adults like us getting more involved. Keep it up. I have a strict rule against margin. I play it safe and don't mess with margin at all since I'm fairly new.
its nice to know someone is in my position as well, thanks for the reply. concerning margin, i am not actually going to buy anything with it but i a margin account to trade correct? That way i will not have limitations anymore?
With very little capitol and much to learn, try Oanda. Open a game account in two minutes and trade away. Good luck!
Undercapitalization is the number one reason for failure, and you are below even the bare minimums. There is no sense in blowing out your funds by trying to actively trade at this stage, because that's what will happen. Save your money and grow your account, and prepare for trading later by working with a demo account now. At your age you have many trading years ahead of you, and lots of time right now to prepare properly before diving in. I know that patience is not a quality of most 18 year olds, but you have to discipline yourself to do the right thing. Discipline and patience are both keys to good trading, so right now is a great time to start practicing both.
Go sim and once your making consistent money sim trading than go live. If you don't have much money go to a prop firm. Commissions are low, leverage is great, and the platrofms are usually much more geared towards day trading. Best of luck to you.
ok thanks for the advice everyone, i havnt been able to find a decent website for papertrading - any suggestions? or should i just do it by hand? -thanks again!