MrRenev
Education

How to avoid the huge risk imposed on us with the PDT rule.

SPCFD:SPX   S&P 500 Index
Heeey.

Ah, the Pattern Day Trader rule. A work of geniusses.

Why lose less than 1 month salary when you can blow half of your life savings?
#For Your Protection

Here I describe how to get around that smart rule:

When you want to close a long the same day, you open a short for the same size.
When you want to close a short the same day, you open a long for the same size.

That's it, trololo.

A bunch of failed investors that turned to regulating because they are too bad to actually make money in the markets, think they can outsmart me? ROFL.

Here is what I saw on the EU regulators site:
"NCAs’ analyses on CFD trading across different EU jurisdictions shows that 74-89% of retail accounts typically lose money on their investments, with average losses per client ranging from €1,600 to €29,000. NCAs’ analyses for binary options also found consistent losses on retail clients’ accounts."

Almost 75 to 90% truly lose their money. Dayum. You bad.

But the NA regulators, maybe their idea was "Ok if someone cannot figure out he can long AND short to effectively close a position, then he needs protection"?
Only issue is we pay double the commissions then...

This is really smart, now (since 2001), poor newbs, rather than blow 1-2 months salary quickly, and either quit or learn their lesson and git gud, will put all their life savings in, and lose anything they had beyond 25k quick then lose the reminder slowly.
GG WP good rules. Why lose a little of money and time when you can lose ALOT of money and ALOT of time?

Can't tell if NA or EU regulators are the dumbest. Oh there are no limits on trading bipolar Oil , in NA want to trade FX with 400 leverage?
NP you're good to go just need to scan an id and within a few hours you can open your first trade sized in the millions with the few grans you deposited. WP.

#Protected.
Comment: With few opportunities I am getting, I have been considering going BIG on the few trades I get (on Oil in particular) to really make it count.
Good way to take a 10% loss in a day.

This is how protected I am.
Comment: I started crying and running to EU regulators and holding their leg.
Please don't let me go I am scared. Will binary options hurt me?
They scaaared me. It is good you banned them, but can you make sure none is hiding below my bed? I can't sleep :(
Comment: Wait US Forex traders cannot hedge? Didn't even know XD

"New Compliance Rule 2-43(b) requires an FDM to offset positions in a customer account on a first-in, first-out basis, thereby prohibiting a trading practice commonly referred to as “hedging.” A customer may, however, direct the FDM to offset same-size transactions even if there are older transactions of a different size. Rule 2-43(b) is effective for any positions established after May 15, 2009. Offsetting positions that were established prior to the effective date do not have to be liquidated, but once either position is closed out after May 15, it may not be reestablished as a hedge."
Comment: Holy shit that is dumb

Why? XD For more "protection"

let's protect traders by outlawing hedging, seems amazing.
Comment: WHY IS IT SO COMPLICATED.
WHYYYY?

WHY THESE STUPID RULES?

Holy these monkeys have 2 braincells or what?

Having a swing trade long and day trading short on the way up is way too advanced for them to even consider this?

Grug buy. Grug strong hand grug no sell. Grug exit now. Grug new trade.

Even monkeys can think of strategies more complex than straightforward...

Better wagecuck trading is too hard with all the "protection".

I think now I understand why so many retail investors start financial institutions and call themselves "fund managers".
Go expert mode, avoid all the "protection".
Comment: About EU CFD limitations...

Some investors plan to get around the new rules by electing themselves as “professional traders”.

To do so, they must meet two out of three criteria, which include experience as a financial professional, having a portfolio exceeding €500,000 or proven trading experience.

But some argue this new distinction is unfair to smaller traders.

“It is anti-democratic as the rich still get the higher leverage,” said David Atherton, a day trader and director of trading analysis site Matrix Trade. “There is now a barrier to entry to learning how to trade which was not there before, blocking a new generation of traders.”
Comment: These wonderful rules, that limit leverage to 30:1 on FX majors... I don't even know if it is in TOTAL all position combined or 30:1 for a single pair...
Comment: Just spending the whole day what am I saying whole week on the phone or exhanging mails with FX and stock brokers...

Ye average beer drinker won't ever bother doing all this, he is sure to be "protected".

This trick might or might not work with your broker. Go have several ones then...

I don't recommend hedging with a different broker... The price will just go against you on one and you get liquidated they don't care about your hedge on ANOTHER account, and then it will reverse after you got liquidated and you won't get your money back with your hedge...
Comment: If EU FX intelligent limits are global and not pair by pair trading is over.

This can't be it...

Traders all over the world have several positions at the same time.

Only institutions are allowed to trade now.

Can't hedge yourself, can't swing trade more than 1 at once with no leverage, can't day trade... Everything is illegal but buying a stock and HODL at 90% loss while you watch tv and drink beer.
Comment: "Day Trading: Your Dollars at Risk
April 20, 2005

Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day traders usually buy on borrowed money, hoping that they will reap higher profits through leverage, but running the risk of higher losses too."

seconds to minutes!!!

Then why make a rule "mmmmuuuhhh 5 trades a week u a day trader".
Comment: I don't want to have several stock brokers & I prefer to use a US one.

So here is how I am doing it:

- I found out a "fill the gap" strategy. If the right conditions are met the winrate is 90%. Can probably be increased further. The RR is I think around 1 or better. As this only works intra day, that strategy is closed to me. I don't really have the time anyway so does not truly matters.

- Now, stocks unlike FX and futures move in straight lines (not really, but compared to FX/futures there is quit a difference). There are no constant zig zags, just check this:
So going with the trend on retrace should work much more often and the gains in percent are 2 digits. Could drop 10% overnight thought that is a 10% loss on the position (if bullish).

a) Cannot take profit. A good way to not limit your risk and end up eating large losses.

b) This is why (well its not the only reason) I go aim for several positions. Not going to go all in on a single stock and see my account drop by 10% in a day even if that is what very intelligent regulators push people to do.

c) Diversifying is limited. The rules I have are: never open more than 3 in a day. And if in a week I had to cut my losses on 3 trades the same day I opened, I am done for the week cannot risk opening new trades.
This for obvious reasons.

d) Never scale in and if I close the same day, never scale out. It will be counted as several day trades. Also cannot add to my position another day once I opened as if I close that other day it will count as day trades (did I mention how stupid all of this was?).

Making it simple for retail traders to mess up and blow up. Good job.
Easy for me to deal with this even thought quite a nuisance but I can tell with 100% certitude alot of noobs are going to mess up and get caught in devastating losses XD
WP regulators.
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.

Comments

Wait, doesn't a buy order if you have an existing long (or vice versa) close the original position? Or are you talking about having 2 seperate non PDA accounts and effectively net closing the position in one with an opposite side trade in the other?
Reply
MrRenev TucciMane
@TucciMane, Either have 2 accounts but watch out broker talk with each other, OR having 2 positions opposite one of the other that don't close each other.
On some brokers it's autoclose, on some other brokers it is not... I asked a stock broker which accepts non us users, still no answer, I will update when I get an answer.
Reply
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