Considerations Going From Sim to Real

[John Arndt 1]

I might add that another consideration is the position size of the trade. The IB tiered rate is favorable to small share size, scaling. The psychology of $2.95 per trade would be tough for my trading style. My average trade cost through IB is $0.75 per trade. This makes me not even worry about a trade versus P/L or scaling in or out. Tough to beat unless you are an Andrew trading massive positions. With his share sizes, the SureTrader/CME Lite cost would be advantageous. YMMV.

 

 

[Robert H 455]

Andrew posted this in another thread.

1. Over the long term you pay less commission to ST than IB with their 2/95 flat rate.

 

2. Also ST provide you with free DAS, but IB does not.

 

3. Also ST is having a $500 signing bonus which is great for the first month. $500 free trades.

 

4. Another reason is short selling. SpeedTrader is really good to provide stocks for short selling, or the so called “Hard to Locate Shorts”

 

At the end, they are both good.

 

If I were not Canadian, I would have used SpeedTrader for sure.

[Andrew Aziz 98]

Speedtrader is offering our traders a better deal than IB:

 

https://speedtrader.com/bearbulltraders/

 

Per-Trade Pricing

$2.95

Per trade*

 

Per-Share Pricing

$0.0039

Per share*

 

Also, they offer 1 months free or $500 in fee trades (whichever comes first).

 

 

[wpicotte 16]

STs minimum balance is $30k. IBs is $25k. With both, these balances must be maintained day-to-day or account restrictions are applied.

 

Given this reality, when establishing a PDT account, one really should plan to fund the min balance + extra. Funding the min balance and no more assumes only winning trades.

 

How one deals with this is an individualized decision, but I'm curious about whether there's a 'best practice' to follow when establishing such an account. 2% over min balance, 6%? Or just whatever a person can manage?

[Robert H 455]

IB's minimum deposit is $10k. The minimum balance to trade a margin account is $2k. Remember that the $25k PDT rule is a government regulation that brokers enforce.

 

SpeedTrader appears to have factored in initial losses; this is why they require $30k. See the following excerpt from their policy page regarding minimum balance:

EQUITY REQUIREMENT: The amount of equity required to open and maintain a pattern day-trading account is $25,000. If the equity falls below this amount additional funds must be deposited to bring the equity back up to $25,000. If the minimum equity is not maintained, the account may become a regular margin account with buying power determined by the clearing firm and limited to 3 day-trades in a five day period. Positions held overnight do not count as day-trades.

 

Every trader takes different risks, trades different type of stocks, etc. It really depends on the individual and what they afford. I've seen chat members start with $27k, $30k, all the way up to $35k. The more the merrier.

 

Marek, I recommend you pose your question regarding stop losses in the Day Trading Basics section.

[wpicotte 16]

I was referring to PDT rule scenarios, but that was implicit, I guess.

 

The more the merrier, indeed! Thanks for digging the equity requirement verbiage out. I missed that.

[Miguel Angel 65]

Robert H, the chart was very helpful. Thanks for posting!

[VikingTrader 0]

Hey All,

 

I have been a member for about four months now, sim trading each morning with everyone in the chat room, and have reached a point where I feel ready to give live trading a shot. I have the minimum needed to open a SpeedTrader account and their incentives for us at BBT made them an attractive option. However, at about a mid-point in the application process where they were needing more and more information from me (they don't go so far as asking for blood type, but it appears they need to know everything else about my life), they made a point to let me know that I had selected that I had between 0-1 years experience in trading, and they said that I needed more than 1 year of trading experience to open a margin account. This was surprising to me in the sense that I had seen no mention of that requirement on their site anywhere, or here within the forums or the chat room, and for SpeedTrader to offer incentives to a group of aspiring traders who are mostly just starting out on their trading journey seems counter intuitive considering that we are mostly all coming into this with less than 1 year of experience. I realize I could have lied and told them in a response email that I had more than 1 year of experience, but I feel it ridiculous that I should have to be disingenuous or to lie in order to start my trading career.

 

I am wondering if anyone else has encountered this issue or knows a solution to the conundrum. I have called IB to see if they had similar requirements and they said that they do. It seems to me pointless to be fortunate enough to have enough capital to open a SpeedTrader or IB brokerage when neither are viable options due to my being a newcomer to trading. I had prepared to face intense frustration upon starting to trade live, however, I am caught off guard by how frustrating merely opening a trading account has become.

 

I suppose I will narrow my options and re-consider CMEG or Suretrader now (assuming they don't also have an experience requirement), but the whole multi-day affair has to this point left me much less eager to begin than I was prior, and has introduced the first doubts in mind as to whether this is the right course for me since beginning with the community. I would welcome any advice, or stories of similar circumstance to help to reinvigorate my efforts. I also wanted to make mention here to those who are also weighing the different brokers to go live, that if you intend to apply for IB or SpeedTrader and are like me a "newbie" you must lie about your experience level to open the account.

[wpicotte 16]

VikingTrader, my scenario is a carbon copy of yours. When I received the email from SpeedTrader with the response about experience, which incidentally was the same one used to request even more of my personal information, I went to IB's site to complete their application. My account with them was approved and fundable a couple of hours later (and yes, I answered their question about trading experience honestly).

 

Based on my current trading style, the difference in commissions will be negligible and possibly less with IB, since per-share pricing seems favorable when scaling out of trades at the sizes I take. I'm OK with paying for DAS for now. If a few months of live trading demonstrates that I accrue commission fees sufficient to waive the DAS cost, perhaps I'll reconsider SpeedTrader but as far as I'm concerned, they can kiss my ass. It's my money and their loss by putting up unexpected, unexplained hoops.

[VikingTrader 0]

Wpicotte, with the kind of account creation speed you experienced and no hold ups over experience, I think I will give them an attempt as well. Thank you for the info! And my sentiment with regards to SpeedTrader is identical to yours now at this point. ;-)

 

I hope they don't give you any trouble Marek and let your app go smoothly. It just seemed so odd to have that old catch 22 of, can't have an account without experience but we won't give you an account so you can accrue experience. Didn't see that one coming.

 

Thank you both for the info. I will give IB a shot.

[Robert H 455]

I recall IB asking similar questions regarding trading experience, net worth, income, employment, etc. Even my Canadian broker--Questrade--asked the same questions when I opened registered accounts with them.

 

I believe these are standard regulatory questions. Not defending SpeedTrader or anything, but $30k (and 4:1) leverage) is a lot of money. They may be obligated to ask since clients will be trading/speculating with large sums of money through them as a broker.