I may be disappointed by the sports ban … but also I think you can use this opportunity to learn to trade smarter.
I love sports. Growing up, they were a huge part of my life. I played tennis throughout my childhood. Then I suffered a career-ending injury to my elbow.
My career was cut short, but the lessons I learned through sports shaped me. The intense competition and drive I gained on the court helped me. I took those lessons and applied them to trading.
After surgery, with time on my hands, I channeled my focus into learning the stock market. I was already experienced at putting in the grind to achieve success. I knew how to get good at something from the dedication and determination I developed through tennis.
And I found success in the stock market — where the odds of success are only 10%.*
(*My results are not typical. I’ve spent years developing exceptional skills and knowledge. Always remember trading is risky. Never risk more than you can afford.)
The Sports Ban Silver Lining
Sports are a rite of passage for many young children. But today … as our world faces an unprecedented coronavirus pandemic … sports are nowhere to be found.
It’s disappointing for fans and tough for the entire industry. But it can also be a chance for you to up your trading game. If you want to learn to trade smarter, dedication and determination are key. Now, with the coronavirus sports ban, you have time on your hands.
And it’s not only sports. President Trump’s national emergency declaration is shutting everything down…
The Global Destruction of COVID-19
We’ve never seen anything like this. A lot of people are buying up blue-chip stocks, thinking we’ve hit the bottom. I know some rich people who bought Boeing (NYSE: BA) when it was around $150–$170 per share…
Then it tanked again to around $100.
We don’t know where the bottom is.
Industries that have never closed are being forced to shut their doors.
And there was no toilet paper. Absolutely none. When it comes to life and death … I guess people are more worried about toilet paper than making the world a better place.
As for the athletes, I sympathize with them. They’ve worked their entire lives to make it to the highest level. And now an unprecedented virus is destroying chances of winning championships.
But at the same time, I admire the drastic steps organizations and institutions are taking to protect athletes, students, and the general population. When I first wrote about the coronavirus (or the COVID-19 virus) about a month ago, I didn’t know how devastating it would be in the U.S.
Could we have seen this coming? Absolutely. We could have prepared more. But hindsight’s always 20/20.
On March 8, there were 500 confirmed cases in the U.S. On March 15, that number jumped to 3,000. People who have it but don’t have symptoms are walking around thinking everything’s fine and spreading the virus even more.
That puts us at more risk. The virus could mutate and become more deadly.
There’s so much we don’t know about this pandemic. And too many people seem to think the virus is a joke. Government officials attempted to calm the public … which only resulted in more misinformation spreading.
Then as more countries around the globe went on lockdown and the world saw a surge in cases…
The stock market crashed … It’s down nearly 30% off its all-time highs from less than a month ago. We’re seeing crazy volatility.
COVID-19 isn’t the only cause of the drastic pullback and bear market … But it’s a major player.
Don’t Assume the Market Will Bounce Back
I often say I’m a glorified history teacher. And this is when history really matters.
Look at what’s happened with past pandemics. During the 1957 pandemic, stocks didn’t come back that quickly. Same with the 1918 pandemic. Look at the Great Depression. Study!
We don’t know what’s going to happen. We’re in Great Depression territory in terms of this crash — the price action is similar to 1929. Again, we don’t know where the bottom is. It all depends on this virus, which is unpredictable.
I’ve been doing this for over 20 years. I don’t know everything. But I find my experience helps me give good, sane, and conservative commentary and perspective.
Be careful who you follow. Some of these ‘gurus’ aren’t bad people … but their lack of experience and knowledge can hurt you. So be careful of who you follow.
There’s so much opportunity if you get away from the mainstream strategy BS out there. Focus on being a meticulous trader.
For example, Biomerica, Inc. (NYSE: BMRA) announced its rapid-results coronavirus test on March 17. On March 18, it opened at around $6. It went up to the $14s in after-hours trading.
Then there’s Blue Apron (NYSE: APRN), which quadrupled this week.
You don’t have to invest in ETFs and guessing-game blue-chip stocks.
You just have to be a little meticulous. The best investment you can make is in yourself. I’ll get to several ways you can do that in a bit.
America’s Love For Sports
With all this panic and uncertainty, it feels like professional sports may not return this year.
No one can say for sure. We’re only in the first inning of this pandemic.
We’re living in desperate times with no sports to ease the burden. Why are sports so important to us anyway? I think Showtime’s hit show “Billions” explains our relationship with sports perfectly…
“… Sports franchises are how we knight people in this country…”
(Check out this recent episode of the SteadyTrade podcast where hosts Tim Bohen and Kim Ann Curtin explore the myths behind “Billions.”)
We worship our favorite players and teams. Fans paint their bodies, party all night to celebrate wins, and live vicariously through athletes.
And it’s not just in the U.S. People all over the world love sports with a fanatic adoration.
Sports Allow Us to Forget
In 2017, Americans spent an estimated $56 billion on sporting events.
That’s a massive industry to shut down. TV networks and pro sports organizations will face difficult times if the leagues remain suspended for an extended period of time.
Money aside — sporting events bring people together. In the current political climate and intense polarization, I feel we need sports more than ever.
And we’re in such unprecedented territory, people are scared. No one knows what to expect.
How long will this virus last? How much danger are we truly in? Will we survive this?
If America is one thing, it’s resilient. And a lot of us like to rally behind sports. It gives us a point of focus and pride.
For example, after the events of September 11, 2001 Americans were scared. The largest attack on domestic soil had the entire country on edge. When President George W. Bush threw the opening pitch at the next Yankees game, it was a powerful symbol of American resilience.
New York City and the U.S. were able to start the long healing process and rally behind our favorite pastime. The few hours of live sports united a lot of the country and drove the Yankees to the World Series championship.
What’s Next For America?
Statista estimates that over half the population watches more than three to five hours of NFL every week during the regular season. That’s just the NFL.
Once you factor in the MLB, NHL, MLS, and NBA, it’s likely most Americans spend close to 10 hours a week watching sports.
And now, POOF … sports are gone.
So what should you do with your extra 10 hours every week?
STUDY! STUDY! STUDY!
Learn to trade. If you already know how to trade, learn to trade smarter. This is a perfect opportunity to focus on your education and improve your life.
A lot of people will probably sit around, play video games, or watch Netflix. But you’re different … right? You’re dedicated to actively improving your life.
In 2018, Netflix viewers spent over 52 billion (BILLION!) minutes watching “The Office.” They spent nearly 33 billion minutes watching “Friends.” Don’t add to this statistic. Don’t be lazy right now. This is your…
Look … I know the phrase is cliché. But this quarantine is a once-in-a-lifetime opportunity. How often does the world force you to self-quarantine for 14 days?
Are the conditions ideal? No. I’m not gonna sugar coat it … it’s scary out there.
But as Warren Buffet says:
“Be fearful when others are greedy and greedy when others are fearful.”
The entire world is scared right now. So get greedy — for knowledge. Learn to trade smarter and be self-sufficient in the market.
Don’t just shut down and weather the storm. We will get through this. I want to see each and every one of you better off than the lazy competition. This is a unique moment in time. And you can learn so much from the markets right now.
And given how a huge part of the world is shutting down, it’s a smart time to…
Learn to Make Money From Home (or Almost Anywhere)
Here’s some inspiration for you … More millionaires made their fortunes in the Great Depression than any other time in history.
It sounds counterintuitive, but it’s true…
Times of economic or social uncertainty can offer unparalleled opportunities to those willing to take risks. Stocks are cheap, money is tight, and risks are high. During these times, most people freeze. They don’t act … Instead, they let opportunities slip away.
Don’t let this be you.
Will COVID-19 plunge the U.S. into a recession? I honestly don’t know.
But I’m glad we’ve entered a bear market. I’ve been praying for one for years. I think it’s healthy. It’s part of the natural economic cycle. The U.S. just experienced its longest bull run in history. The economy is simply taking a break. Things will cycle through and we’ll eventually go higher.
Take this time to study. Many of you have 14 uninterrupted days to work your butts off.
Not sure where to begin?
Choose Your Level of Commitment
I’m all about education and opportunity. So I have a lot of ways to help you learn to trade smarter. You can choose what works for you, starting with…
… my completely free penny stock guide here. Bookmark it and refer to it as often as you need.
Want to know which stocks I’m watching? Subscribe to my no-cost weekly watchlist here. This is a great way to learn how to choose stocks to watch AND the process.
I upload videos about trading to YouTube regularly. Subscribe to my channel — it’s yet another no-cost way to continue your market education.
If you’re a bookworm, get “The Complete Penny Stock Course” by my student Jamil. It combines all my lessons into one book. It’s a great way to learn the rules I follow when I trade. (For the record, I trade with these rules and use these brokers.)
For access to my 6,300+ video lessons, subscribe to Pennystocking Silver. That’s one more way you can learn from my 20+ years of experience trading penny stocks. Too many of my students complain they don’t have time to watch all the video lessons.
And for the ultimate level of commitment, apply for my…
My most comprehensive course is my Trading Challenge.
Fair warning … you gotta apply, and not all applicants are accepted. You must be willing to commit. That means watching all the videos, doing your research, and building your knowledge account.
My top students and I give students live Q&A webinars every week.
All of my top students are Trading Challenge members. That includes six- and seven-figure students. And now, Tim Grittani’s passed the $10 million profit milestone … You can have the chance to learn to trade smarter from an eight-figure true master trader.
Dedicate yourself to my lessons now and you can emerge from this crisis more prepared than the competition.
I wanna give props to my student Popcheez. He reports making over $35K this month using my strategy.* That’s awesome. Solid work.
3:37 PM Popcheez → timothysykes: Best trading month of my life! Turned $4000 into over 35K this month using our guru’s techniques! Thanks everyone!!
This is why I love penny stocks. Everyone hates on them, which makes the patterns more predictable. It’s crazy.
I don’t like guessing games. I don’t want to invest in something, then worry about whether I’m gonna make or lose money. I like my patterns and they’ve worked for me for over 20 years of trading.
[*Student results aren’t typical. Most traders lose — around 90%. Trading is RISKY. Never risk more than you can afford.]
Bottom Line: Learn to Trade Smarter Now
I have no idea how long it will take to recover from this coronavirus crisis. The economic impact of this will be huge. Remember, It’s not just sports … Tourism, small businesses, entertainers around the world will take a huge hit.
We could be out of the woods in a few months … or it could take several years. Don’t let this scare you…
Uncertainty breeds opportunity.
My question to you: how will you answer the call?
Hit those books. It’s time to study. Have more questions? Get in my chat room.
What do you think about the coronavirus pandemic, the stock market crash, and the mass cancellations? Comment below — let’s keep the conversation going.
The post How the Coronavirus Sports Ban Can Help You Learn to Trade Smarter appeared first on Timothy Sykes.
Pink Sheets: Definition, Examples, & OTC Markets in 2020
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Have you heard of pink sheet stocks? Do you understand how they’re traded?
The pink sheets are a listing of over-the-counter (OTC) stocks that work differently than those featured on a stock exchange. Many traders get a bit uneasy around this topic … Why?
Pink-sheet securities tend to be associated with small, sketchy companies.
But with the right knowledge and diligence, there can be great trading opportunities with these risky stocks. More on that later on.
For now, know that I’ve made most of my wealth through trading penny stocks. For me, it’s been an amazing way to hone my trading and teaching techniques, while building a fortune over time.**
[**My results are NOT typical. I’ve spent years developing exceptional skills and knowledge. Always remember trading is risky. Never risk more than you can afford.]
This isn’t investing. It’s trading. There’s a big difference. With trading, you don’t have to wait for months or years to collect profits or realize losses. Trading in this niche can move FAST. So you gotta be prepared. Especially if you trade penny stocks and pink sheets…
So let’s look at pink sheets, OTC pink sheets listing requirements, and how to trade pink sheet stocks online.
What Are Pink Sheets?
Pink Sheets are stocks that are traded over the counter — that’s why they’re often called OTC stocks. In other words, they aren’t traded on the major exchanges, like the NYSE or the Nasdaq.
And stocks on pink sheets aren’t subject to the same financial disclosure rules as larger stocks.
These stocks got their name from the pink paper the quotes used to be printed on. These days, they’re traded electronically on the OTC Markets.
These companies are usually penny stocks. They’re some of the smallest companies on the market.
See which stocks I’m watching — get my no-cost weekly stock watchlist here.
How Do Pink Sheets Work?
Every day, the OTC Markets Group distributes listings of smaller stocks — usually penny stocks. They’re thinly traded and not usually interesting to major traders and investors. Just like regular stocks, there’s a bid and ask price for each.
You can identify pink sheet stocks by the ‘PK’ ending on stock tickers.
With pink sheets, you can find companies whose stocks you might want to trade — long or short. Pull up their charts on a platform like StocksToTrade to start researching where those stock prices might be heading.
Pink Sheet Listings
Most companies listed on the pink sheets are small, sometimes sketchy companies. But that doesn’t mean you can’t trade them.
Yep, some of these companies are small and illiquid. So you gotta be careful. But just like stocks listed on the major exchanges, these companies can move on a catalyst — like a press release or earnings.
That can lure investors or traders to the stock. Again, be prepared. These plays can go fast and fade back to nothing.
But there are a few companies listed on the pink sheets that are legitimate companies…
Pink Sheets Examples
Let’s look at a few legit companies listed on the pink sheets:
- Nestle (OTCPK: NSRGY)
- LVMH Moet Hennessy Louis Vuitton (OTCPK: LVMHF)
- Bayer Aktiengesellschaft (OTCPK: BAYRY)
These are companies with market caps in the billions. Bayer is a large pharmaceutical company with almost 100,000 employees.
It has real products and a real business structure. So why go public on the pink sheets? To simplify their exposure to the U.S. markets. These companies can provide one set of financials (by choice since it’s not a listing requirement) instead of providing another set that meets U.S. standards.
So, yeah, there are real companies. But there’s also a lot of sketchy companies. There are shell companies and others close to bankruptcy. It’s a buyer-beware market. This is why it’s so important to do your own research.
If you’re trading one of these stocks based on a press release … don’t overstay your welcome.
Pink Sheet Trading Time and Access
The OTC Markets and pink sheets trading is open from 6 a.m. to 5 p.m. Monday through Friday. But like the major exchanges, the majority of the trading is done during regular market hours of 9:30 a.m. to 4 p.m.
How Are the Pink Sheets Different From a Stock Exchange?
Pink sheet stocks aren’t regulated like stocks on the major stock exchanges. They’re not listed on those exchanges, either.
Some pink sheet stocks issue financial documents such as profit-and-loss reports and balance sheets, but they’re not required to do so. You won’t find them on the trading floor.
The OTC Market is not a stock exchange. It’s a quotation service. Orders are processed through market makers who input quotes and orders through secure computers.
Pink Sheets vs. OTCBB
Many people confuse pink sheets with the over-the-counter Bulletin Board (OTCBB). They’re two radically different organizations.
The OTCBB is an electronic quotation service. It also happens to list OTC stocks. It’s owned and operated by the Financial Industry Regulatory Authority (FINRA). It provides market information through its website. But the private company OTC Markets has pretty much taken over as the platform for OTC listings.
OTC stocks are listed as OTCBB, OTCQB, or OTCQX. Pink sheets are listed as OTCPK.
OTCBB companies still have to meet the requirements for listing on the OTC markets. This requires regular filings with the Security Exchange Commission (SEC).
Pink sheets have no listing requirements or disclosures with the SEC.
Why Companies Are Listed on the OTCBB
A company may be listed on the OTCBB for a number of reasons. It may be too small to list on the major exchanges. Or it may fail to meet a major exchange’s requirements and be delisted.
Or a company might list on the OTC Markets because it wants exposure to American markets without having to meet major exchange standards.
OTC Pink Sheets Listing Requirements
To list on the pink sheets, there’s only one requirement: that the company register Form 211 with the OTC Compliance Unit.
There’s no requirement to disclose financial information. Companies also aren’t required to keep a minimum price per share like the major exchanges.
Advantages and Disadvantages of Pink Sheets
Let’s talk about penny stocks for a second…
Originally, penny stocks were called such because they traded at less than $1 per share. Today, largely because of inflation, they trade for $5 per share or less.
Some pink sheet stocks aren’t penny stocks. Most of them, however, trade at less than $20 per share. They’re often behind new, small, or at-risk companies. That’s where the risk for traders comes in.
But there can be some advantages.
For one, you can take larger positions on pink sheet stocks because they’re priced so low. Instead of buying 10 shares of a $100 stock, for instance, you could buy 1,000 shares of a $1 stock. And since price movements happen quickly, you can potentially take profits or losses much faster.
Even if a pink sheet stock moves by only a penny, great returns are still possible. Let’s take the above example. You bought 1,000 shares for $2, and you sell when the stock hits $2.02. That’s a 2 cent change.
You pocket $20 on the trade, minus fees with your broker.
That might not sound like much … But multiply those profits by hundreds of trades over months and years. See where I’m going?
Pink sheet stocks can allow you to trade new companies that are experiencing upward trends. Or you can trade a company that’s sunk super low but shows promise for an upward trend.
Don’t think it’s easy. There are risks, too.
Disadvantages of Pink Sheets
Worse, if a stock moves opposite your trade thesis, you might not be able to find buyers. You can’t exit your position quickly. That can mean big losses. And rule #1 is always to cut losses quickly.
Analysts generally don’t cover these stocks. So it’s up to you to do your research and watch out for scams. And since pink sheet stocks don’t have to provide fundamental data, information can be limited.
The Pink Sheets Tier System
The OTC Markets provides a tier system for identifying a stock’s health and risk level.
Tier one is a stock identified with “Pink” in pink writing. These companies have provided current information such as financial statements and a disclosure statement with annual and quarterly reports. Sticking with tier-one stocks can be smarter for risk management.
Tier two is labeled by a ‘yield’ icon. There’s limited publicly available information on the company. Companies in this category have information that is no more than six months old.
Then you have the distressed tier — the dark or defunct tier. These are labeled with a ‘stop’ icon. It means the company isn’t willing or able to provide current information to regulators or the OTC Markets.
Finally, there’s the toxic tier. These are labeled by a skull and crossbones. OTC Markets won’t provide quotes for these companies as they represent high-risk stocks. They’re considered scams or have been promoted by unscrupulous industry ‘professionals.’
Should You Trade Pink Sheets?
Before you trade pink sheets you MUST consider your risk tolerance. Remember, these are some of the sketchiest companies in the market. Especially those that don’t provide any financial information.
Whether you trade pink sheets depends on your comfort level with the trade. If you see potential and the play lines up with your strategy, it might be worth the risk. But if there’s no volume in the stock, you could get stuck in your position.
Always play it safe and cut losses quickly if the trade goes against you.
How to Buy Pink Sheet Stocks
Pink sheets aren’t traded on sheets of paper like they used to be…
You can buy pink sheets online by placing an order through your broker. But keep in mind, you’ll have to have the right data package and broker to access the pink sheet market. (I trade with these brokers.)
But before you jump into buying or selling pink sheet stocks, consider the following…
Key Tips for Pink Sheets Trading
If you’re interested in pink sheets trading, you need to know how to manage your risks and how to spot potential breakouts and breakdowns. Let’s look at some of the most important factors to consider before buying or shorting pink sheet stocks…
Research the Pink Sheet Company You Want to Trade
A little research goes a long way, but a lot of research makes you a smart trader. It’s amazing what you can dig up about a company if you’re willing to look.
For example, let’s say you have your eye on a penny stock that trades on the pink sheets. It looks promising, but the company doesn’t make any disclosures.
Head to Google. Seriously. Type in the company’s name, then click on the ‘News’ tab at the top of the search engine.
You can learn a lot this way. Does another company want to acquire or merge with the company you’re interested in? Has the CEO recently been ousted?
Negative and positive news can tell you a lot about potential future price movements for a given stock.
Analyze the Pink Stock Price
Pink stock prices can change fast in just a few hours. This isn’t always the case … But I like to look for lots of price movement.
So how do you do this? Study the charts. What has the stock price done over the last day, the last week, the last month? You need to know.
What’s the bid-ask spread? What’s the volume? Answer all these questions so you know what you’re getting into.
I have several indicators I check for every trade using in my Sykes Sliding Scale. You can learn how to use this tool to help plan trades by studying my “Trader Checklist Part Deux” guide.
Learn How to Find the Most Active Pink Sheets Stocks
To find trading opportunities, look for the most active stocks. I use this stock scanning software every day. When price movement ramps up, it could mean a trade opportunity.
Think about it. If a stock remains within a few cents of its stock price for days or weeks, there’s no reason to trade that stock. I like to take advantage of supernovas. I can take the meat of the move and move on to the next trade.
Analyze the Effects of Trading Halts and the Delisting Process
Trading halts and delistings occur for a variety of reasons. You can take advantage of halts in some circumstances, but you have to pay close attention.
A trading halt happens when the exchange, such as the pink sheets, temporarily halts all trading activity for a given stock. The company might have heard rumors about fake promotions, criminal activity, or something else.
Delisting happens when the pink sheets remove a company from its listings. The company might have gone out of business, gotten acquired, or violated rules.
You typically don’t have to worry about trading halts or delisting, but it’s helpful to consider what might happen if one of those events occurs in relation to the stock you’re trading.
Why Companies List on the Pink Sheets
Companies list on the pink sheets for the same reason that larger companies list on the major exchanges. They want to raise capital for business expenses.
Being Delisted from a Major Exchange
If a company gets delisted from a major exchange, it might list with the pink sheets to continue raising capital. Maybe the company suffered a major hit and needs to rebuild.
When this happens, you need to pay careful attention. Why did the delisting occur? How has the stock been performing since it initially debuted on the pink sheets? You gotta do your research.
Are Pink Sheet Stocks Safe?
There’s no such thing as a safe investment or a safe trade. If there were, we’d all be instantly rich.
That doesn’t mean they’re all dangerous, though. If you’re willing to put in the effort, understand the pink sheets, and research individual stocks, you can trade safer.
Risk vs. Reward
It’s always a matter of risk versus reward. Let me give you an example…
Say you see an infomercial for what a company calls the most amazing vacuum cleaner. You’re intrigued. The company isn’t offering a guarantee, but you really want this vacuum.
Let’s say that the vacuum cleaner costs $600, and the ad promises it can cut your cleaning time in half. That’s a risk-versus-reward situation.
The risk is that you buy the vacuum and it doesn’t work as expected. You might be able to sell it online — probably at a loss. And you’ll be thoroughly disappointed.
The reward happens if the vacuum arrives and performs exactly as promised. Your house is cleaner, you spend less time cleaning, and the cost becomes worth the product.
It’s the same way with the stock market. You’re taking a risk because you believe the potential reward outweighs it. But you gotta work your butt off for it.
How to Learn About the Stock Market
Ready to learn even more about trading and the stock market? I hope so.
Teaching trading is my passion in life — next to my charity Karmagawa and traveling. I’ve been trading for over 20 years and teaching for over 10 years. I want my students to learn to think for themselves and trade through any kind of market.
I want them to be self-sufficient traders. You can be one too.
Start your penny stock journey free right here on my blog or on my YouTube channel. Check out my penny stocks guide (also free) and download my autobiography “An American Hedge Fund.” Check out my Volatility Survival Guide.
Read and watch as much as you can every day. That’s one way you can become more comfortable with pink sheets, OTC stocks, and trading.
Learn With Me in the Trading Challenge
Will you be my next millionaire student? Maybe. Maybe not. But you’ll never know unless you try.
The biggest appeal that pink sheets carry for traders is their low price. These stocks are attractive to day traders looking for low-priced stocks that can make big, fast moves.
But a lot of pink sheet stocks lack transparency. They can also be very volatile and lack stringent regulation. But if you’re a trader who’s willing to do your own research and due diligence, these stocks can provide trading opportunities.
If you’re one of those traders and ready to commit to your trading education, apply for my Trading Challenge. It’s not easy, and not everyone who applies will be accepted. Are you up for it? Apply today!
What do you think about pink sheet stocks? Let me know in the comments … I love to hear from you!
The post Pink Sheets: Definition, Examples, & OTC Markets in 2020 appeared first on Timothy Sykes.
How to Grow A Small Trading Account📈
Wrote a lil blog with some tips to help grow a small trading account! Here it is:
Almost every trader that is brand new to the market starts off by trading a small account, as they should. After all, why dive into the high-risk world of day trading with all of your hard-earned life savings at risk? It's best to start small and slowly grow your account, or even add more to your account in the future when you're more confident in your trading. However, most people dream of starting a small account of a few hundred or a few thousand dollars and growing it one trade at a time, which is obviously easier said than done. In this post I'll be sharing some tips and tricks that can help you grow a small trading account. Most of these I even used myself when I first got trading and I believe they played a big role in helping me grow my account.
Before getting to the good stuff, you may be wondering why it's actually more difficult to trade a small account than a large account. The main reason for this is because of the Pattern Day Trader (PDT)Rule. The PDT rule limits U.S. based traders with less than $25,000 in their trading account to only 3 day trades per 5 business days. Further limitations are placed on accounts that break the PDT rule by placing 4 or more day trades within a 5 business day period.
The PDT rule was put into place by the SEC with the hopes that it would protect new traders from trading too frequently and quickly losing their money. In reality, a lot of time what it actually does is forces traders to hold risky positions overnight that they would rather exit the same day, due to them not having anymore day trades available.
There are a few ways that new traders can, in a way, get around the PDT rule to be able to place more day trades. First, they can look into opening an offshore trading account. Now, I know it sounds a bit sketchy… but opening an account with a reputable brokerage based outside of the U.S. is a legitimate way to get around the PDT rule. The reason this works is because the PDT rule is for U.S. traders and if your money is in an account outside of the U.S, you're free to trade as much as you'd like!
Another way to increase your number of day trades, without opening an offshore account, is to have multiple brokerage accounts. For example, if you have $2,000 to start trading, you could open 2 separate brokerage accounts with $1,000 in each and will then have 6 total day trades per 5 business days (3 with each account). If you're starting with a larger amount of money, but still under the $25,000 PDT minimum, you can even open more than 2 trading account if you'd like and will have 3 day trades in each one!
One issue you may run into using this method is that you can only have one margin account per brokerage. Margin accounts are required if you're someone that short sells or plans on doing some short-selling. Because of this, you should have separate accounts with entirely different brokerages. For example, one account with Etrade and one with TD Ameritrade.
Aside from the broker that you're using to do your trading, there are of course actual trading techniques and strategies that you can do with you small account that will give you better chances of growing over the $25,000 PDT minimum too. One of those strategies is to simply learn swing trading. You'll still be able to use your 3 day trades per 5 business days, but if you really want to put your money to work while your account is under the PDT rule, being able to profitably swing trade is an incredible way to grow your small trading account.
A swing trade is just a position held anywhere from a few days to a few weeks. This is different from day trading, which is when you exit your position the same day that it was opened. The nice thing about swing trading is that there are no limitations on how many swing trades you can place, even with a small account. One great way to swing trade is to follow stocks that already have momentum. By doing this, you're following the stock's trend rather than trying to fight it! "Follow the trend. The trend is your friend." – Jesse Livermore
You can use a screener like the one here on finviz.com to find stocks that already have some upward momentum. To do this you may include "Performance +10%" over the past week while screening. This will give you a list of that have gone up at least 10% in the past week. Of course, you'll want to narrow it down further but this is a good way to at least start searching for some stock with some upward momentum that you may be able to get in on.
The next tip for growing a small trading account is one that should be used regardless of the trading type that you're doing, whether it's day trading or swing trading. Risk proportionally to your account size. This means that, for example, if you would be risking $250 to $500 with a $25,000 account… you should only be risking $25 to $50 with a $2,500 account. It's important to know your max risk before entering a trade and using the proper position size based on your risk.
Doing this will help you prevent any major losses and save you from blowing your entire trading account with just one bad trade!
Hopefully instead of having to worry about blowing your trading account, you'll have to worry about my next tip. Don't remove your profits from your trading account. When you first start making some money it can be very tempting to move those profits straight into you bank account, but you'll never grow your trading account this way. In my opinion, you should maybe give yourself some milestone payments along the way, but keep a majority of your profits in your account until it's grown to your goal account size. By "milestone payments," I mean maybe withdraw some profits once you grow your account to $10,000 or $15,000, rather than randomly after you've made any profits at all.
Hope you found this helpful!
Official r/StockMarket Discord Live Chat, link on the right –>
This is another re-post to the thread that I had up a few months back. Thought it was time for a new one.
If you are looking to hang out with a group of active traders & investors discussing the stock market, feel free to drop in on our official Discord server. It's completely free, and signing up to join is incredibly easy.
To get to our Discord server, click on the invite link which I have linked for you all down below here-
Registering your user handle should take no more than a couple of minutes. You'll just need a valid e-mail address to verify your Discord account and that is really pretty much it, you'll be connected and ready to chat with all the rest of us!
You can either run Discord through your web browser, or you can download the Discord application to have it running in the background of your PC. There are also mobile apps that you can use, for example here's the one for the iOS device.
Our Discord server comes complete with stock bots as well.
For those of you who are be completely new to Discord and are wondering… "bots!?"
Yes, we have bots that can automatically posts charts and other useful market information in the chat on executing commands.
Almost all of the bots that you'll see on our server have been scripted from scratch from yours truly, and have them hosted right from my local server at home.
Anyway, unlike our last thread I did up, I won't post the full list of bot commands to this thread as it is quite extensive. I've posted the full list of commands right into our Discord server under the channel named #bot_commands which you can find on the left sidebar of the chat at the top underneath the WELCOME channel group.
You can also have the bot DM (direct message) you the full list by typing !help into any of the channels as well.
Again, if you are looking for our official invite link to our server here it is:
The link can also be found on the sidebar right here on r/StockMarket.
I hope all of you who participate in the everyday discussions on this subreddit, will be able to join us in our live chat as well. There are lots of great discussions going on in there daily!
Finally, don't forget to pay a visit to the #rules_guidelines channel.
Anyway, I'll leave it at that for now.
Hope to see you guys on the chat very soon!
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