Picking a trading style / account min. balance.

maxhouston said: "Hello Everyone, In my efforts to learn more about the stock market, I am learning that most traders have a “[B]style[/B]”. As near as I can figure, I will probably end up being a “[B]swing trader[/B]”. However I am somewhat concerned about the requirements when it comes to getting an online broker account. Some people are telling me that if I have more than 2 trades per week (I am guessing 1 trade equals to my “[B]buying[/B]” and “[B]selling[/B]”, thus making that one trade (an “[B]in[/B]” and an “[B]out[/B]”), then if I “[B]buy[/B]” and “[B]sell[/B]” again in the same week, then that tends to get defined as two trades by most brokers). Yet some people say in this scenario, it is considered 4 trades and not 2 trades (i.e. anytime there is a transaction of “[B]buying[/B]” or “[B]selling[/B]” of stock, is considered one trade). Thus confusing this issue even further, I have heard that most brokers will automatically consider you a “[B]day trader[/B]” if you have more than 2 trades per week. Then once your style of trading gets classified as a “[B]day trader[/B]”, most brokers require that you have a minimum of 25K in your account. Yet this does not make any sense to me, since I am buying stock with my own money in my own broker account . . . I am not borrowing any money from my broker and nor am I borrowing any money from anyone else for that matter. So why do I have to keep a high balance in my account (i.e. 25K) or a particular balance in my account anyway? If this is true, does that mean that I have to keep a minimum of 25K in my account, yet I would have to come up with additional money to purchase stocks and I am not allowed to touch the 25K required balance)? I also heard that the 25K minimum balance is only if you have a [B]Margin Account [/B]and or if you get branded as a “[B]day trader[/B]”. Lastly, (“[B]generally speaking[/B]”) when it comes to a minimum dollar amount requirement to open a broker account (based on each broker), is that a minimum daily amount that needs to remain in the account (to keep the account open and in good standing with that broker), or is that just the minimum amount that is needed to open the account, yet as soon as you open the account you can then spend every penny of the balance to buy stocks (minus the broker fees) until all of the dollars that are depleted end up at a zero balance until you get ready to sell the stock (hopefully at a profit) so that the money will automatically go back into the account and at least cover the remainder of the broker fees (at the time of the "[B]sell[/B]" or the "[B]out[/B]")? So can someone elaborate on this for me? Thank you. I am [B]VERY-VERY-VERY [/B]confused of this issue. Help! :dazed002: Max"

ratAphooey said: "The minimum is the amount to open to open the account. You can go under. I have two accounts with $10 in them and they have never been closed for years. I will leave your other questions alone because I am not sure."

AlfredSokol said: "Two trades a week wont automatically make you a day trader."

StockHunter said: "The $25K requirement is for "pattern day traders" see [URL="http://www.finra.org/InvestorInformation/InvestmentChoices/DayTradingInformation/p005906"]http://www.finra.org/InvestorInformation/InvestmentChoices/DayTradingInformation/p005906[/URL] for a full explanation"

maxhouston said: "Hey there [B]Rataphooey[/B]. Thanks for your input and answer to my question. I greatly appreciate it. It is good to learn what I will be dealing with once I get an account. Thanks also [B]Afredsokol[/B]. Mainly I am trying to learn how is a trade defined . . . does buying one stock and turning around selling it constitute 1 trade or 2 trades. [B]Stockhunter [/B]thank you for the link you provide. You link provides [B]EXCELLENT[/B] detailed information! This is very good and very useful information to know! Since I plan to do swing trades (once I start playing with real money), based on your link, I just have to make sure that I do not do more than 4 trades during any five business day period and I “[B]think[/B]” I should be okay. Thanks a[B] MILLION Everyone [/B]for your help! :clap: :clap: :clap: Max"

AlfredSokol said: "You're quite welcome my good man. Each time you buy or sell a stock that is one trade. So consider that if you plan on trading. If the commission is $10, it will cost you $20 total to get in and out. Plus you have to pay taxes on gains."