day trading for a living

I have made several trades in my Roth IRA in the last few days. Is the buying and selling of the same stock in the same day considered one or two trades? I know it takes 4 trades in 5 consecitive business days to be marked a "pattern day trader". So what would really happen if my IRA was "marked", and since IRA’s arn’t eligible to be margin accounts, does it even matter? What are the consequences?

I’m not sure if you can get "marked" in an IRA account. Because it’s a "cash" account, not margin, it would be harder to do enough day trading to meet the requirements. In my IRA account, it seems that if I do a day trade (or even an overnight trade), I’m not able to reinvest the cash from the sale until the day that the purchase settles (i.e. the third business day after the purchase).

For margin accounts, if you’re marked as a pattern day trader, additional rules kick in. One example is a $25,000 minimum equity requirement, special margin limits, and additional ways you can get a margin call.

I don’t know anything about a rule that blocks you from trading for a week, though if you violate some of the rules, you account can become treated as a cash account for 90 days.

Check this website (and the one it links to) for more details: http://www.patterndaytraderrule.com/

I have opened a cash acct in scottrade for trading with under 25k. I have done like 4 or more times trading in a week. However, i am only using the settled funds for trading and never violate the regulation T rule. Is that count as a "pattern-day-trader."

As long as you are buying and selling with cash, it does not classify you as a pattern-day-trader. The pattern day trading restriction can only happen if you are trading in a margin account. It is hard to day trade with cash only, but if you have the settlement times down (sounds like you do), you have nothing to worry about. Good luck!!!

Through trading I have learns many different ways to trade. The topic I will focus on is trading penny stocks with the technical aspect. Here are 10 things to help you in making trading decisions on a technical basis.

Background Information – Check the major averages and market sector. It is important to also look at the technical picture for the average(s) of which it is part–if available, and examine the market sector chart.

Look at all time frames – Daily, weekly, monthly and beyond. Study longer term charts, volume, and indicator patterns before making any decisions based on the daily charts. Look at the daily chart and indicators, if trading on an intraday basis.

Trend Considerations – Examining whether there is a trending or consolidation pattern apparent on the char. Basically, this is always having an eye as to whether the market is trending up or down, versus being in a sideways consolidation or trading range. If in a trading range, is it well-defined, wideranging or relatively narrow, and how long has it gone on? For example, is its duration as long as the prior trend in terms of weeks and months? When a consolidation has gone on as long or longer than a prior price movement of a similar nature, be alert for any trend change.

Overbought/oversold considerations – Long and short-term. As a further technical backdrop, it is recommended to be aware from day to day or week to week, of the relative position of price momentum oscillators like RSI and MACD for daily, weekly, and monthly timeframes. Be aware if the market or stock is approaching an overbought or oversold extreme, whether momentum up or down has been strong, or has slowed significantly. If an extreme reading is at hand or if momentum measured by these indicators has stalled, then it’s imporant to follow the price and volume patterns closely for signs of a reversal, while keeping in mind that there are many consolidations along the way in a trend. A sideways trend bears watching in terms of protecting existing profits if the high of the price range already got near price objectives. It may be time to take profits or raise protective stops.

Predictive Patterns – Price and volume. Make a determination of what patterns, if any, are developing, such as rectangles, flags, triangles, double bottoms, double tops, and so on with a possible measurement of an associated minimum upside objective. Volume is something to look at along with price, to determine if the volume pattern is confirming price action or not.

Trendlines and price channels – Construction of any relevant trendlines and price channels is very basic to effective technical analysis and a study of the trend, even if you merely use a straight edge to make more of a mental check of where trendlines are forming or get pierced. While not an everyday occurrence, a return to a previously broken trendline often offers a second opportunity for a trade or investment entry.

Retracement calculations – For the markets and individual items you follow, calculations for any return or rebound of 38%, 50%, or 62% of a prior price swing is essential. A strong move that retraces more than 62% up to two thirds or 66%, often suggests that momentum will carry back to the prior high or low.

Moving Averages – It is suggested that you keep track of some of the basic and key moving averages, such as the 21, 50, and 200 day moving averages. These can help confirm other indicators regarding a current or upcoming trend.

Oscillators – Another frequent check is of the relative position of at least one of the popular oscillator-type indicators like RSI, slow stochastics, or MACD on both daily and weekly or monthly chart basis. This is more than just seeing if they are at an extreme (overbought or oversold), as oscillators are a basic indicator of price momentum. On daily charts, I especially keep track of the RSI indicators with a length calculation of either 13 or 14 and 21 days as well. On weekly charts check the MACD oscillator.

Divergences – One of the great values of the oscillators, and volume indicators as well, is to highlight points when they diverge from price action, such as failing to accompany prices to a new relative high. This type of divergence is much more crucial when the market has been trending for a long period and is, or has been for some time previously, registering an extreme. Such divergences are not by themselves indications to buy or sell, but alert you to a possible reversal. This situation should then cause you to check where key trendlines or moving averages would be violated. Surprise often is the enemy of quick market action, as there is initial disbelief in a reversal. Preparedness is important.

Article Written by Dave of Stockhideout.com Best Penny Stocks

rob rens
http://www.articlesbase.com/finance-articles/technical-basis-of-penny-stocks-97550.html

I see several questions about buying stocks and selling them several times a week. I see many of the answers saying that you can but it is risky and you have to meet specific requirements? and why would you be called "pattern day trading" and what are the consequences for buying/selling a lot?

Depending who your broker is you have to have a certain amount of money in your account to make trades that fast. It takes about 3 days for trades to clear but when you have a certain amount of money in your account like $25K or more I think they clear them faster.

Pattern day trader is a term defined by Securities and Exchange Commission to describe a trader who executes 4 (or more) day trades in 5 business days, provided the number of day trades are more than six percent of the customer’s total trading activity for that same five-day period. As the trader is exposed to the danger of day trading and intra day risks, it is subject to specific requirements and restrictions.

As for as buying and selling the same stock a lot I say why not but its really hard to time the market. Also at some point when you do something to much you get got caught. Meaning you might buy it low and it keeps going lower. But if you can catch the price when its low and sell when its high by all means do it. I also think you would probably have to buy a lot of stock to make this profitable for you

Let’s say I hold 100 shares of stock XYZ overnight. The next day, I buy 100 more shares of stock XYZ. Later that day, I decide to sell the 100 shares of stock XYZ that I held overnight. Do the IRS and the SEC honor the same first-in-first-out rules when it comes to day trades? In other words, is this considered a day trade?

Yes. No.

after much practice, i am ready to start day trading with real money. i have about 5,000 to start with so 25,000 is not a possibility for me

is this statement correct…
once i get labeled as a pattern day trader and i only have a max of $5,000 to use, i WILL still be able to day trade with my $5,000 of equity and i will NOT be able to use my margin account

you can only do a limited amount of day trades with shares per week. Not sure it its 3 or 5.
But you can (day) trade options of those shares, and you can day trade futures and forex unlimited.

The Forex market is vital to the general prosperity of the free world economy. Why? Some $1.5 trillion dollars worth of international currencies are bought and sold every single trading day. It is by far the largest traded market in the world. This volume of trade is equivalent to over six months of trading in the New York Stock Exchange, which has an average daily volume of $10 billion dollars.

Even though the major focus in this country in reference to investing has always been and still is the stock and equity markets, the Forex market is 150 times larger than the New York Stock Exchange. See the chart below for an illustration of the daily trading volume of the New York Stock Exchange, the US Bond market, and the Forex market.

As you can see the Forex market is by far the largest market in the world. Unfortunately from 1971 until very recent years the virtual owners of this market were the major banks, large brokerage firms, and multinational corporations.

Major banks, even the Federal Reserve (which most Americans are unaware is a privately owned bank owned by mega-wealthy international bankers) realize a large segment of their profits (sometimes as much as 40% or more) from trading currencies.

Up until recently if an individual wanted to trade currencies on the Forex market, the only way possible was to invest with a bank, which required not only a minimum of a one million dollar cash deposit, but this large deposit also had to be backed by a five to ten million dollar net worth.

As some time progressed a slightly better option was trading with a brokerage firm, which asked for a minimum deposit on average of a quarter million dollars. Then factor in the myriad of sophisticated communication and trading facilities necessary to trade, and this profitable market was unreachable to most individuals.

Accessibility

Fortunately for you and me, the Forex market has now been opened up to small-scale investors. Unlike the enormous amounts previously required by the banks and brokerage firms, comparatively far lower margin requirements are finally available, which now allows virtually any individual to trade this highly profitable market.

There are now many brokerage firms that specialize in trading currencies, which allow a minimum deposit that is much more reachable to most of us. In addition, the recent boom in computer and communication technologies has made this market accessible in ways previously exclusive only to large players. Thanks to the Internet, electronic trading is now possible for anyone with a computer and access to the internet to trade currencies.

Liquidity

There are many reasons that investors are being attracted in large numbers to the Forex market. One major reason is liquidity. This market can absorb trading volumes and per trade sizes that dwarf the capacity of any other market. On the simplest level, liquidity is always a major attraction to any investor as it allows one the freedom to open or close a position at will.

Another desirable aspect of Forex is when day trading currencies your trading account is always liquid. At the end of each day trading your account is liquid cash, totally accessible, unlike stocks and mutual funds, which normally tie up your capital for months at a time.

High Profit Potential and Predictability

Years ago, like stocks, futures markets generally moved slowly and steadily toward price points (up or down). However, since about the early 1980’s virtually all currency markets have become increasingly volatile, and the time required for the same price movement has become considerably shorter. Now, with long-term speculation with stocks or equities becoming increasingly risky, trading Forex and taking advantage of its clear and predictable price trends is becoming increasingly popular.

Many investors are choosing to focus their energy on the currency markets simply because they offer the greatest predictable daily price movements, with the least risk. While professional fund managers at major banks may behave independently and view the market from a unique perspective, most, if not all, are at least aware of important technical chart points in each major currency.

As these important levels approach, the behavior of the market becomes more technically oriented and the reactions of many managers are often predictable and similar, thus market movements at these important technical levels can be predicted through simple technical analysis. These market periods may result in large price swings as substantial amounts of capital are invested in similar positions.

Furthermore, thanks to the computer revolution, home computers have become increasingly more powerful and affordable. This power, coupled with the ease of Internet access has afforded the most casual of investor the same real-time access to the market that the professional trader on the trading floor has available. If it weren’t for the instantaneous delivery of price information, and the ability of our computers to quickly analyze incoming information, day trading would not be possible.

Simplicity

Instead of attempting to choose a stock, bond or mutual fund from thousands available in the equity markets, the foreign exchange market deals primarily with just eight to ten different currencies. Along side the U.S. Dollar, four major currencies dominate the trading on the $1.5 Trillion dollars traded daily on the Forex markets. This is due by nature of their popularity, activity, volume, stability, and confidence.

Clear Trends

Any professional trader knows that trends are the essence of profitable trading, and knowing this makes the idea of trading currencies very attractive, because currencies are the worlds best trending markets! Many studies of trend following systems prove that currency trends are the most consistent and profitable!

Regardless of the type of trend following system used; long term, intermediate term or short term, currencies invariably outperform all other markets including stocks, bonds and other commodities. It should come as no surprise that some of the worlds’ most successful traders are currency traders.

Traders such as George Soros, Bill Lipschutz, and Bruce Kovner earn hundreds of millions of dollars per year trading currencies! It is a well-known fact in the world of currency trading that on one occasion the billionaire George Soros made in excess of one billion dollars in a day with a trade he executed on the British Pound/US Dollar.

One reason currencies trend better than every other market is because of their macro-economic nature. Unlike many commodities whose supply and demand fundamentals can literally change with the weather, currency fundamentals are much less random and far more predictable. In summary, currencies are one of the best all around markets, currencies represent the worlds’ largest marketplace, and have the most powerful and 10 persistent price trends, in other words, immense opportunities for profit.

In addition each individual currency offers it s own unique pattern of movements and trends, which provides investors diversification within the Forex market.

Martin Chandra
http://www.articlesbase.com/finance-articles/why-trade-the-forex-market-and-why-is-it-attracting-so-many-participants-81023.html

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I made three day trades last week. One on tuesday morning, one wednesday, one on thursday. Am I safe to make another day trade tuesday morning, or will I be flagged, and thus should wait until wednesday? Better yet, is it 5 days, counting the tuesday I daytraded on, or is it tuesday to wednesday one day. I have less than 25,000 equity. Thanks

Most brokers have a warning somewhere on your account page that tracks how many trades are on your "counter". That is the best place to check, just to be sure. Both of my brokers show it on the account status page where they show me available funds, margin used, etc…

Say I buy 10 shares of GOOG today, then later I buy 5 more for a total of 15 shares.
If I sell these 15 shares in the same day (as one trade) will it count as one or two round trips?

If you buy the same stock, at 3 different times in the same day, and close all of that same stock in one trade, that will be considered 1 "round-trip". Selling again will trigger another round trip, and another sell will trigger a third. The next round trip in the next 4 business days will freeze your account (you can only close existing positions) for 90 days, or until you get $25,000 cash into your account, whichever comes first. This also applies to options.