Interactive Brokers: Stuck at a Cross Roads

[SamuelRice 1]

Hello BBT, I am in a little bit of a predicament. I spent the last 8 months learning, practicing in SIM, and figuring out a way to finance my day trading journey and now I seem to be stuck. After opening an account with interactive brokers and securing 30K to trade I thought all my worries would be behind me as far as obstacles that did not pertain to my day trading strategy and the ins and outs of actually trading. However, I have come to find out that I can't trade short, due to not being able to open a margin account because I am not 21. Not being able to trade short was unfortunate but now I am stuck with not having enough buying power to take the number of trades I want in a  day. I am finding myself fixated on only taking one trade a day so I have enough buying power for the rest of the week since it takes so long for the money to settle, which is causing me to be narrow-minded and miss out on trades that fit my trading style. So I guess my question is, is there a way to have your money settle more quickly with IB, or do I just bite the bullet. As far as other brokerages outside the U.S. I tried CMEG, which is too costly for me personally. I really don't know what to do now, I feel foolish for not knowing that I had to be 21 to open a margin account, but also don't want these last 8 months to be a waste. Any suggestions would be awesome, thank yall for the support. Have a nice night. 

Edited January 6, 2022 by SamuelRice

[Paul aka Aurbano 83]

hi @SamuelRice ... I've been "fighting" with IB and its nouances for 3 years now as I never used DAS but TWS ... You have to take into consideration this : "their game their rules". They have a terrible customer support and they actually don't care at all for retail traders.  My actual residence is in Spain and as EU citizen I am not allowed to trade indexes (spy, qqq, ...) or any other ETFs.

This being said, they offer by now a great platform and in you case I'd rather move to options (1 contract = 100 shares) using always the shortest timeframe and price target however this have tons of details to take also into consideration plus the time needed to barely touch the surface of options trading. TWS is a great platform for this operations and you have it for free.

Hope this give a new scope to your troubles.

[Gene 8]

You might want to consider trading options.... If you have a "cash account" options trades will settle the next day and you will regain your full buying power the next day instead of having to wait 2 days for the stock trades to settle.  

A second option would be to consider opening an LLC and then using the LLC to open the trading account.  This would allow you to have a professional account where the LLC is the "owner" of the account and not you as the individual. This is a more complex way to start your trading career but it should solve the problem you are facing. 

Good luck!

[Bailey Nevener 83]

If you trade higher capitalization stocks, and are scalping, you can trade options in lieu of stocks fairly easily.

Long stock => Long Calls, at the money, at the nearest expiration date.

Short stock => Long Puts, at the money, at the nearest expiration date.

 

You trade at the money so you can get the greatest level of liquidity.

 

Since most of the stocks we trade on here have high RVOL, they will likely also have elevated implied volatility.

If you are Long Calls or Puts, the implied volatility will often (but not always) drop after the open, making the amount of time you are in the trade a huge factor.

Anyone who has day traded options knows what I am talking about.

 

Try going Long OTM PUTs on GME as it tanks and try to get out breakeven even though it has dropped 15% in 30 minutes double limit down. 

Thought you would profit?  Not with that IV crush sonny.

For risk-management sake, stay away from Out of the Money options during day trading unless you know what you are doing.  

 

The mix of the elevated IV dropping with the near expiration date is a disaster for Out of the Money options. 

You pretty much have to choose a further expiration (sacrificing your risk management via poor liquidity) to predictably profit.

 

If you aren't scalping, you can use further out expiration At the Money and even In the Money options for a more direct substitution to shares.

The more concerned you are about IV being crushed, the more you should try to get an In the Money option order filled to eliminate its effects.