IRA Accounts for Day Trading?

[wayneb 7]

Does anyone use an IRA account for day trading? I think I read IB has one but you cannot use it for shorts.

[Robert H 453]

I'm pretty sure SEC regulations disallow shorting in a registered account (IRA, 401K, TFSA, RRSP, etc). Check with individual brokers for other restrictions.

[RTrader 20]

Yes you can DT in an IRA. You have to use a broker that has settlement margin. IB has this, Tradestation, and now Lightspeed also has it for IRA's. This way your cash balance will be available right away after a trade is closed rather than the 2 day settlement time you have to wait for a normal cash account which is what most IRA's are. As with any 'margin' accounts, the PDT rule applies. You can also trade futures in an IRA to really boost your buying power, but I don't recommend it unless you have an edge trading futures.

You cannot short stocks or use buying power over your cash balance. But, you can trade inverse ETF's to gain on sell offs or trade put options.

I personally use my IRA to DT because I'm not living off trading income, and IRA's also have the benefit of no taxes to report or owe at the end of the year on gains. In a normal account you can lose a major chunk of your gains just in short term gains tax. I think the biggest issue with it, is you cannot just re-load the account if you lose a bunch of money. So manage your risk tightly in an IRA.

Hope this helps.

 

J

[wayneb 7]

Thanks RTrader. I wonder if you can have a split account for shorting. I don't think you can DT without being able to short.

[RTrader 20]

You can without shorting. It actually helps you only focus on long setups. Helps to keep your mind clear from thinking long and short constantly! The less decisions you have to make, the better.

Edited March 14, 2019 by RTrader

[wayneb 7]

In sim now but I'll try it. Who knows maybe I'll be a better trader! Thanks again.