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Just getting started with Charles Schwab
Old 10-03-2019, 02:11 PM   #1
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Just getting started with Charles Schwab

I just opened an account yesterday for doing some small NASDAQ penny stocks trades, and not really looking for any other options right now. I'm thrilled to find out that they have waved the transaction fees (formally $4.95 each)

I may start with $1000-$2000 cash, and research which 5 day gainers I want to try out.

My ultimate goal is to help offset the cost of all my medical bills by picking a few up/coming pharmaceutical companies who have breaking news innovations, and shoot off the NYSE charts...I know, a pipe dream, but it will be interesting over the Winter.

If there are no transaction fees, is it unlimited (10 trades a week), and is there any other fees associated to the actual buy/sell other than the taxes ?
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Old 10-03-2019, 03:16 PM   #2
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There will be SEC/exchange fees. For most retail investors it will be 1 cent or 2 cents on each sale transaction. I am certain Schwab will charge that as all who offer commission free trading charge it, otherwise they would have to pay that fee as it is not their own.

Unlimited means unlimited, not 10 trades a week. I do not know if Schwab places any limitations on the number of trades. Robinhood does not - it is unlimited commission free trading. Since Schwab and all the others are doing this in response to Robinhood, Firstrade, IBKR, they will provide unlimited with no cap.
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Old 10-03-2019, 03:50 PM   #3
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The "10 trades a week" is about what I figure I will do to start out with just getting my feet wet. I may decide to hold onto something for longer, or have multiple stocks coming, and going, I don't know yet.

This has always been something that intrigued me, and I figure with a long Winter ahead, and slow times at work (5 more years), I can make a few bucks, and keep my mind active.

If it's something I enjoy, and am successful at, I may throw more $$ at it, and help secure F.I.R.E., and also have a good hobby in retirement.
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Old 10-03-2019, 04:31 PM   #4
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Please stop back in a year and tell us how your "pipe dream" is working out.
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Old 10-03-2019, 04:45 PM   #5
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No commissions certainly changes the landscape and if you are a trader, or contemplating short-term trading, it could/should directly impact your approach.

If you have commissions, then there's a limit to the frequency and the size (how small) a trade you can do before you get eaten up by the commissions. When commissions are taken out of the picture, it opens a whole new set of possibilities. When I realized this, and began trading by exploiting what Robinhood was offering, it became exciting and satisfying and my trading success has gone through the roof. Above all else, what's important is limiting risk, and the way to do that is by sizing your trades appropriately (smaller). Having no commissions allows you to do this. It doesn't matter if the size of your trade is $500, $50, or 50 cents - there's no commission. Starting with $1000 to $2000 this is likely what you'll be looking to do as well. One word of advice though - with an account that size, you are going to be limited in your ability to day trade. Once you are flagged as a pattern day trader (more than 3 day trades in a rolling 5 day period), you need to have $25k account size otherwise you can't day trade and will be limited to the 3 in 5 day restriction. If you're planning on 10 trades a week, you're not going to be doing much in/out each day with the same stock with a $2k bankroll. If you are able, put $25k into the account. You can still set aside your $1k or $2k for trading and have the remainder in a cash-like mutual fund or ETF, just as long as your account value is at least $25k then you won't have the day trading restrictions.
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Old 10-03-2019, 07:29 PM   #6
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The $25K sounds like a good idea for leaving static while trading the $1000. With kids at home in college, and still working, it's not likely to happen though.
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Old 10-04-2019, 08:34 AM   #7
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So you haven't read the fine print yet? Better call Schwab and ask them. This deal at Schwab and all the other brokers that have gone to zero commissions is too new for anyone here to have any feedback.

Also be aware of the SEC pattern day trader rules.

Good luck!
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Old 10-04-2019, 11:02 AM   #8
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I've read the SEC pattern day trader rules, and have revised my plan a bit. I'm looking for stocks that have good analyst ratings, a higher suspected target price, good history, with possibly good news headlines, and positive social media.. I'm looking for stocks that have over 1,000,000 average volume, and are seeing current volumes higher than that.

All that said, I may have 2-3 trades a week max, while holding some longer term for future gains.
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Old 10-04-2019, 04:47 PM   #9
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What kind of money do you expect to make each day with day trading $1K?

If you can make $100 a day, or even a week, the same trading applies to a 7-figure account will bring more money than even the most prodigious "dough blowers" here can spend.
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Old 10-04-2019, 05:18 PM   #10
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Originally Posted by NW-Bound View Post
What kind of money do you expect to make each day with day trading $1K? If you can make $100 a day ...
OTOH: A couple of years ago I met with at TDAmeritrade branch manager doing some research for the investment class I teach. TDAmeritrade has historically specialized in serving amateur traders. As we were finishing up, I asked her what, on average, their trader clientele had achieved in the previous year.

There was a bit of an embarrassed pause and she said: "About 1.5%." That was in a year (2017) where the S&P returned over 20% and several indices were in the 30%+ range. Considering survivorship bias, her number almost certainly indicated overall negative returns.

Be careful out there!
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Old 10-04-2019, 05:31 PM   #11
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If the OP commits only $1K to this endeavor, and does not transfer more money in to "get it back" when he loses, it is not bad.

People lose more than $1K at a time going to Las Vegas, and although I have never gambled in Las Vegas nor done day trading, I will say that I would rather lose $1K on day trading than in Las Vegas.

Stock trading allows you to change your mind and to cut loss, while in gambling, once you put your money on the table and the cards are drawn, you cannot change your mind.

Somehow, the lyrics of a song come into my mind:

Now you swear and kick and beg us that you're not a gamblin' man;
Then you find you're back in Vegas with a handle in your hand
Your black cards can make you money so you hide them when you're able
In the land of milk and honey you must put them on the table
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Old 10-04-2019, 09:51 PM   #12
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I'm not a gambler, and have never set foot in a casino, or done any betting. I hope to build the $1000 to $2000 by intuition, and research, hopefully learning what works. This will be a hobby to start with that could potentially give me some nice pocket money to splurge with, and "blow that dough".

Pull the profit $1000 out, and play again.
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Old 10-04-2019, 10:38 PM   #13
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I went inside casinos to look around, but do not like to gamble.

Back on stock trading, it always involves a certain amount of risk. The risk is less for longer holding periods.

For short-term trading, the element of chance is so high that it resembles gambling to most people. Some skilled people can figure it out, and they can make money consistently. Day trading is beyond most people, myself included. I tried to trade on a monthly basis, and that is plenty hard.
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Old 10-06-2019, 11:22 AM   #14
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I think I'd rather take my chances in Vegas than on small pharma companies.
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Old 10-06-2019, 11:36 AM   #15
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Quote:
Originally Posted by ckelly78z View Post
I'm not a gambler, and have never set foot in a casino, or done any betting. I hope to build the $1000 to $2000 by intuition, and research, hopefully learning what works. This will be a hobby to start with that could potentially give me some nice pocket money to splurge with, and "blow that dough".

Pull the profit $1000 out, and play again.
Sounds wonderful. Be sure to let us know how it works out.
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Old 10-06-2019, 04:42 PM   #16
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I hope to get it started this week. I will make periodic updates for the good, and the bad results.
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