Strategy for ret account that has under 25 K?

Trading and Markets
1

I have an issue to select something due to account under 25K and futures are not allowed in Ameritrade… I need something that will have positions trades so trades will not be interrupted and account will not be flagged as day trading. Any suggestions?

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Hi Paul,

Based on what you’ve written above, I might have a system you’d be interested in tracking. It focuses solely on US equities and uses buy only transactions (no short selling). It makes about 100 trades per year and though occasionally the trades open and close the same day, a typical trade length is 4-6 days so it should not be flagged as day trading.

The track record is still in its infancy on C2 but has shown some success, and I would be happy to share trade records from the last couple of years. The system is very manageable on accounts of 25K or less as that was the original purpose of its design.

You can find Progressive Analytics at https://www.collective2.com/details/93673804. Please feel free to send me a message if you have any questions.

3

Thank you Ryan,I will check it out.Paul

4

Before you start trading any system, I would do the math on the expected costs. I’m assuming the commissions on TDAmeritrade are still $10/trade, or $20 per round trip. Using the suggested system as an example (which I have nothing against), it will cost you about $2,000 per year in commissions, plus another $600/year in subscription fees. For an account under $25K, that is going to take off a pretty big percentage of your returns.

So my suggestion would be to find a system that trades very infrequently, or switch to a broker with lower commissions.

Gary

1 Like
5

Thanks GaryLynn2,

I should clarify that I consider a trade to be one action only (buy or sell), so the 100 trades per year does refer to both buying and selling (some may refer to that as 50 trades).

Managing commissions and fees are essential in trading with accounts under $25K as it is important to look at the big picture and weigh your expected return with your annual costs.

As a rule of thumb, I try to manage my account commissions so they are <0.4% of my total trade value (in and out - 0.2% for each transaction). For example if I were to buy $10 000 of AAPL, my per trade fee should be below $20 or it is too expensive as it would cost me >$40 to buy and sell.

I like to use Questrade for accounts under $25K (but it may only be available in Canada). Commissions are $4.95 a trade and there is no account management fee as long as your account doesn’t sit idle for 3 months.

To find an online brokerage with similar fees you could visit: https://en.wikipedia.org/wiki/Comparison_of_online_brokerages_in_the_United_States

Ryan