Nasdaq daytrading with £3,000

[Naz]

I was privileged yesterday to conduct a trading seminar at e trade's offices at Canary Warf.Many thanks to anyone reading this who was there.

I was pleased to see that e trade are offering 3 different trading accounts to trade US stocks.The first was their CFD platform which allows anyone to daytrade a selection of Nasdaq stocks as many times as they like during the day with only £3,000 thus getting around the $25,000 ruling from the Nasdaq.They also let you short on a down tick.Spreads are 5c if you ask for them.If you get a level 2 screen from your charting vendor.ie someone like e signal you can have the charts and the level 2 together.A nice touch is an OCO order which will allow you to place both your stop and your intended profit.Then walk away from the screen and let the software execute one of the trades and at the same time cancel the other.

Of course this account also lets you trade the UK as well.No money need be sent to the US as everything is handled in the UK.With Nasdaq stocks moving considerably more than UK ones its an interesting starting point for anyone thinking of dipping their toe in the water.

The next two trading accounts move up the ladder as it were.The pro account offering level 2 Nasdaq and the daddy of them all,Light speed an extremely fast Nasdaq level 2 Direct access platform,which i have traded myself.If you want to trade the morning gaps this is a set up that will let you make your days money in the first 45 mins.

Courses for daytrading US stocks and Nasdaq level 2 direct access can be found on the home page of trade2win.

 

[options]

Thanks for the info Naz.

 

[Naz]

You're welcome.

I thought their three platforms gave a wide range of options to many who might want to trade the Nasdaq.

I was particularly pleased with their entry CFD platform as it gets rid of some of the negative arguments that many put forward into not looking at trading the Nasdaq.

The main benefits of which were.
a)£3000 min account allows you any amount of trades per day.
b)Down tick rule doesn't apply.
c)The account can be used to trade UK stocks as well.
d)The account is funded in sterling and run from the UK.
e)OCO orders (one cancels the other) allows one to get on with life whilst managing a trade.
f)The ability to go long and short.

 

[fltbear]

Naz,

Does E*Trade have any advantages over Deal4Free with whom one can trade CFD's or spreadbet many stocks on the Nasdaq?

 

[a320]

One major disadvantage E-Trade has, is the £19.99 commission it charges for US CFD's! Nice trading platform, but Connor & co will have there work cut out to persuade people its better than CMC

 

[options]

I had been thinking along those lines, knowing the english penchant for ripping people off. I haven't looked into it yet, but I'm assuming it would be cheaper to have a usa account through a broker in the usa rather than try to trade the usa through an english broker.
Anyone know for certain?

 

[mmillar]

...I'm assuming it would be cheaper to have a usa account through a broker in the usa rather than try to trade the usa through an english broker.

but then you are back to needing $25,000 in your account to be allowed to trade rather than the £3,000 E-Trade is offering (or minimum margins with spreadbet accounts).

 

[Trader333]

Based upon information given on this board my view is as follows:

1) With CMC the spread for US shares is 5c which is the same as E-trade

2) With CMC there are no other costs to pay (for daytrading) with E-trade there is another £19.99

3) With a CMC spreadbetting account there is no tax to pay on profits, With E-trade there is capital gains tax to pay once your profit is above the CGT threshold


4) With CMC you can trade the US shares with 5% margin and there is a minimum balance of £1K, With E-trade the minimum balance is £3K


For UK traders I simply cannot see the advantage of an E-tade account over a CMC one unless I have missed something ?

Cheers


Paul

 

[Henry]

1) With CMC the spread for US shares is 5c which is the same as E-trade

In theory, but I've watched CMC open the spread up to 30 points or more. Then there's the problem that the spread might indeed be only 5c, but the prices might be 50c away from what's going in the real market. It all depends how fast the stock in question is moving. It would be interesting to watch E*Trades CFD prices and CMCs alongside each other for a while

H.

 

[Mr. Charts]

Trader 333 and Henry are both correct. CMC will also often hang a ticket and re-quote so WYSI-NOT-WYG always.
Whether E*Trade do that, I don't know.
You can certainly make money using CMC, but if you can open a PDT acct your profits will be greater.
Thanks anyway to Naz for pointing this out for people.

 

[Naz]

Yes i'm only pointing out different options for people who want to trade the Nasdaq.

At the other end of the trading spectrum.If you want to cut down on commission charges check out the Lightspeed platform which charges per share letting you scale in and out very cheaply.Work your own order on this and pay no spread if you dont want to.

As someone who traded with Lightspeed a few years back when it was owned by a different company.If you learn to use it well its the fastest level 2 set up i have ever seen.A scalpers dream.I was doing up to 200 trades a day with it.

I guarantee i could hit anything on that screen and get it before anyone else.We placed two traders side by side with two different level 2 screens from different companies and checked out its speed.(I suppose hence the name Light speed)

All the orders are hot key'd and if you wanted to trade morning gaps on three stocks simultaneously,that was the baby.

 

[Trader333]

I have just looked at the LightSpeed platform and I agree that this is a very impressive direct access package. I wasn't aware that most direct access platforms still have a delay in ECN quotes caused by routing via the Nasdaq exchange which Lightspeed overcomes. It is certainly worth considering for anyone who is looking for a direct access platform so thanks Naz for sharing this.


Cheers


Paul

 

[warm_machine]

From personal experience, I have found that CMC's minimum spreads are, on the whole, tighter than E-trade's as far as European stocks go. And while CMC may requote, often it's down to moves in the underlying market or because your order is too big to fill at the best bid/offer (if you have access to L2 pricing, you'll find that most of the requotes are just matching your volume) - although CMC don't put the order into the underlying market, you would be marked down to the appropriate price by anywhere that did, so I don't think that particular issue is too big a deal.
They aren't perfect, but for as far as low cost systems go, they're a decent bet imo.

 

[Naz]

For Nasdaq traders who really want to get in on the action straight after the open and earn their days money in the first half an hour,lightspeed is the most impressive Nasdaq level 2 platform i have seen and traded.It will not let you down.Others can dream about a fill lightspeed will get it.With fast opening plays only the best level 2 platforms work.For exp traders who have just seen their platform discontinued is this an option?
If so this is the e mail for info and more than likely if you mention Naz at t2w a demo package. e mail [email protected].

 

[Naz]

I've watched CMC open the spread up to 30 points or more. Then there's the problem that the spread might indeed be only 5c, but the prices might be 50c away from what's going in the real market. It all depends how fast the stock in question is moving.

H.

As a day trader we need volatile moves but we also need to get in immediately.If we have bad execution problems it doesn't matter how much we pay for each trade if we get stuffed by our entry price.

Whilst teaching yesterday my entry point into WFMI was the blue arrow.The red line was my trailing stop.the move made profits of about $1 which with 1000 shares equates to about $1000. My risk reward was about 1/6.If i had got filled 20c or 30c away from my entry desired entry it would have cost me potentially a few hundred dollars and also i wouldn't have felt comfortable about knowing exactly where i could get out with my initial stop.

A trading set up like lightspeed gets over these problems for a daytrader.First of all i know the system is so quick that if i see something on the screen i can hit it before anyone with normal direct access.So now when i want a stop 15c away and i see someone offering it on an ecn.I know i can get it.This gives me the confidence to take low risk opportunities with the belief that if say 3 ecns are sitting around my stop area i'm reasonably sure i'm going to get out.Not only can i beat anyone else to the trade but the proprietary hot key'd orders will do the job for me if their posturing changes their quotes slightly.

Now psychologically my mind set is right and i feel good about getting those pullbacks.