ETRADE Rookie seeking clarification

Discussion in 'Learn how to trade or invest by asking questions' started by creativeexpression, Jun 25, 2006.

  1. creativeexpression

    creativeexpression New Member

    After having recently begun my etrade account and purchasing stock for my portfolio I was surprised when one jumped up to my alert point and promptly sold it to add the gain to my account. Then in seeing another I wished to buy I began to place the order only to receive a warning that this would result in a 90 day suspension.

    Ebay the explained that there is always a five day float time when I make deposit money from an external source and a three day period after I sell stock before I can purchase new ones.

    With a three day period after a sale before I can buy new stocks how can one even consider prompt sales such as I made to benefit from those times when a stock does well. How then do day traders function if there is a three day lag and 90 day penalty if one proceeds?

    Any best way to work around this?
     
  2. NATHAN LLOYD

    NATHAN LLOYD Active Member

    Find a better broker.
     
  3. creativeexpression

    creativeexpression New Member

  4. bahroor

    bahroor Active Member weekly contest winner won dec/06 simulator

    etrade charges too much for my taste...
    I think scottrade is too much @ $7 a trade, but we all have out own tastes..

    anyway, the 3 day rule applies to everyone (I think day traders too?) and it simply says that you can use the funds from a "sell" to purchase any stock, BUT you just can't sell that one within 3 days of the first "sell" date (the time it takes the funds to "settle"). If you do its a free ride, and that's a no no (says the SEC, has nothing to do with your broker) then your account is frozen for 90 days.
    you can get around that by depositing additional funds to cover that sale.
     
  5. clavocat

    clavocat Member won weekly contest 2x

    bahroor what do u use?
     
  6. bahroor

    bahroor Active Member weekly contest winner won dec/06 simulator

    same as you clavo, but I'm not too happy with them right now.
     
  7. clavocat

    clavocat Member won weekly contest 2x

    yea decently cheap trades but 2-5 dollars is my liking lol, i think im gonna change to IB so i can short stocks under 5 bux, i.e. LOUD lol...but i like how scottrade is near my house and they're real nice to work with...who knows..
     
  8. bahroor

    bahroor Active Member weekly contest winner won dec/06 simulator

    You woulda made a ton on loudd clavo!

    yeah, here's the deal, I hate that I have to send a check to deposit, I think they're slow (in terms of executing orders. etc.). Just basic/barebone service.
    But I guess they're easy to use and relatively cheap...

    regarding IB clavo, fyi, you must keep 2,000 in your account at all times and I think they charge more if you're under 25 (I think I read somewhere that you're 18/19? man, I have a good memory).
     
  9. you guys should try www.lowtrades.com. I like it so far, yet i have nothing to compare it too, and i think "day-trading" is something you have to clarify with your broker then they make you have a minimum balance of xx,xxx dollars to qualify. I know lowtrades is 25 grand.
     
  10. bahroor

    bahroor Active Member weekly contest winner won dec/06 simulator

    Ahhh, they charge $.003 / Share for OTC/ETFs, so I'll pass.
    Also, daytraders must maintain $25K regardless of broker.
     
  11. creativeexpression

    creativeexpression New Member

    RE: "anyway, the 3 day rule applies to everyone (I think day traders too?) and it simply says that you can use the funds from a "sell" to purchase any stock, BUT you just can't sell that one within 3 days of the first "sell" date (the time it takes the funds to "settle"). If you do its a free ride, and that's a no no (says the SEC, has nothing to do with your broker) then your account is frozen for 90 days.you can get around that by depositing additional funds to cover that sale."

    From what etrade cust service told me about the three day rule, if a security is sold, then no other stocks could be purchased for three days unless there is a cash balance in the account above the amount made through any recent purchases sufficient to cover the new purchase or the new purchase would be viewed as being covered by the recent sale and be in violation.

    If this is true, there would virtually always have to be a substantial cash amount left in the account for frequent traders, regardless of the value of the other stock values or size of account. I would surely like to be wrong on this. Question though seems to be that if one has most of their funds invested in stocks, how the heck could one do frequent trades, much less day trades.

    Is there a best forum for such rookie steerage where newcomers to stock trading can continually learn? I'm trying to find a way to learn while investing while staying within the rules. Etrade is more than 12.00 per trade.

    Last, any best sources for information for the best software that would assist in managing and automating as much as possible in the buying, selling, and setting of high/low alerts that would actively monitor stock prices, alert values and notify me immediately as well as tracking all sell/purchase prices and portfolio? I would love to be able to set alerts at a given amount and then have the trade done the second the stocks being monitored met the preset criterion, then the trade and all pertinent data recorded for taxes etc..
     
  12. creativeexpression

    creativeexpression New Member

    Bahrdoor,

    By that 25K deposited at all times, I assume you mean a cash reserve of 25,000.00 and not just a stock portfolio in that amount? It would make sense that if this three day rule is a federal rule it would cover all brokers? I don't see myself becoming a day trader until I learn a lot more, but can envision several trades each week. Maybe for now I need to inure with the folks at etrade about the features and benefits of the various levels of accounts. This was my first week so I have a lot to learn, but have very much appreciated and enjoyed the feedback here!!!
     
  13. bahroor

    bahroor Active Member weekly contest winner won dec/06 simulator

    did you just call me a door dude? lol

    remember, most day traders lose money, stay clear! I know it sounds like a dream job...

    research scottrade and interactive brokers, cheaper than etrade.

    daytraders usually close the day in cash anyway, but they must mantain 25K in equity.

    the 3 day "free-ride" rule is a NASD requirement and does indeed cover all brokers.

    I don't think etrade explained it right. You CAN buy stock immediatley after you sell one; you just can't sell that new one you bought until the 3 days have passed (becuase you are using unsettled funds for the trade).
     
  14. creativeexpression

    creativeexpression New Member

    AH YES, BAHROOR... Sorry for the slip of the keyboard!

    Thanks for the direct and very clear information. I don't like letting money just sit without working, so the thought of letting 25K just sit in an account sounded stupid, but I can understand the 25K in equities. Too, it didn't make sense that any trades of any stocks would require the three day wait on all others, but if it simply means you have to wait three days before selling an individual stock that was just purchased that would make more sense.

    Still, my understanding of the day trading routine was that they may well buy a stock one hour at a low price and then sell it hours later if it rises. Maybe I am wrong. Anyway, it would seem like a huge job to track multiple stocks all day every day to track and then sell with the hope of a rise of a few cents. However, and my thinking could be totally off in this, it would seem to be advantageous to be able to purchase a stock at a low and then sell it if it rises a few days later. This done repeatedly and with proper tracking and alerts would seem a way to build up more equity over time if one studies the companies.

    Admittedly, some "investors" are seeking the long haul rises and able to amass growth over time, but wouldn't the shorter term turnarounds work for one willing to do the work and trying to build a portfolio over the shorter term?

    This was the source of my interest in software that would assist in the process. I was hopeful of something like the ebay managers use to track bids and automatically post responses. In this case that would mean software that one could use to enter their entire portfolio of stocks with purchase dates and prices at the time of purchase as well as desired alert points. The software would then be able to monitors the prices and generate an action once the desired alert point is reached. Then the software could record the sale for tax purposes and update the potfolio accordingly.

    Any recommendations for sites and sources of information expressly for rookies would be especially appreciated. I have already seen that there are so many newsletters and similar sources all with hefty annual fees that one could quickly spend a fortune, but knowing the best source for information that is practical and that a beginner can both understand and rely upon is the challenge.

    Week ONE has been a fascinating few days of discovery, but it seems the challenge is just to somehow introduce some common sense and a methodology to all of this!
     
  15. mpatel

    mpatel Member

    I ask Scottrade about the settling funds. Correct me if I interpreted this wrong, If you have a margin acct it does away with having to wait 3-5 days for the funds to settle. When i talk to the rep, he said as long as you have a margin acct, the only thing to worry about it breaking the patten day trader rule (3 day trades within 5 days.

    f course to have a margin acct. you need 2000. I personally avoid the borrowing but its nice to go around the settling funds rule.
     
  16. optimus25

    optimus25 Active Member

    Open the Margin account if you want to avoid the settlement rule.
     
  17. TradeTheChart

    TradeTheChart New Member

    Not true, OC securities allows daytrading with $2,000. I'm not sure how they get away with it, but they do.

    Also, to the original poster, apply for a margin account and your funds will be available immediately, but you cannot do more that "4" round trips in a five day period.
     
  18. Okay here is my question if i open margin account, let's say with scottrate ( it's 2000 dollars minimum, what is the minimum ammount of time i can keep stocks ?) Can i sell them in a minute after i bought them, or in an hour ? or maybe in a day ?
     
  19. wallstreetsedge

    wallstreetsedge Active Member won weekly contest 2x

    if you sell it same day, thats considered day trading and unless you have $25k in your account, you can only do it 4x per 5 sessions...

    what you can do, is buy it today and sell it tomorrow
     
  20. LongArm

    LongArm Member

    You can do it 3 times per 5 sessions. The 4th time is supposed to get you deemed a PDT.
     

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