I’m drowning! That is the feeling of being a static trader. Today I decided to do a test run of a $2000 small margin account. The goal is to see if it could compete with a cash account of the same size. In the end, I would give full transparency if I decide to do it. My conclusion won’t be so great if I go off of today though. Today I was brought into profit 3 times total. I couldn’t accept only a few bucks knowing I would have to deal with the PDT rule. So, instead we had a standoff. The PDT rule doesn’t help the small guy one bit. Instead it forces small accounts to trade larger position sizes to grow at the same pace as a cash account would. As you may know, cash accounts are not subject to the PDT rule. Only margin accounts have the restriction of trading only 3 times within 5 days (rolling period.) Some might argue if I took better positions, the margin account would crush the cash account. I’m not so sure about that. I think the cash account would need to be used as life support for the PDT bound margin account. If not, the margin account would be dead in the water with less than $2000. If you don’t already know, margin accounts require a minimum of $2000 in order to short or use leverage, and shorting is making money when the stock goes down. That would be the goal with this account, shorting stocks intraday. I like the idea of showing everyone what is possible and probable with these small accounts. I hate the idea of going back to PDT land though. I’m also really concerned about taking my focus away from my primary account and growth. Trading takes lots of focus and perseverance. If you are weak, this is not for you! If you are a hot head, this is also likely not for you. Trading takes extreme discipline. If you are ready to look yourself and all your weaknesses in the face and defeat them, you might be a trader already.
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