Hi, just wanted to check is TOS and Charles Schwab basically the same thing, or do other brokers use TOS as well?
What did you mean by external keypad? Iāve never used hotkeys so is this basically a shortcut for making a buy or sell?
When you mention paper trade is that like a demo account?
So when you deposit money, do they automatically convert it into dollars? does it mean that if you buy any non US shares then youāre having to pay an fx fee?
If you have the 25k in dollars does that mean you can trade as often as you like and they wonāt interfere? thats what I feel happens with PDT if you dont have the right amount.
Thanks for the info
Do you use leverage and the margin account?
Yes, Charles Schwab is the broker, TOS is the trading platform.
You canāt use any other broker with TOS.
You can buy programmable keypads ā kind of like an Elgato Stream Deck ā which you connect to your PC through USB, and then instead of hitting Ctrl+C, or CTRL+A, or CTRL+Shift+Alt+1, whatever keys combo you use, you can just set those to individual keys on the programmable keypad, and just press one key to trigger the same action.
So itās just a quick way to trigger a buy/sell/etc. with a one key press, instead of having to hold down and press multiple keys at once.
Paper trading = practice.
Paper trading is practicing the live markets with fake money. So any losses & wins are fictitious / you wonāt incur any losses & you wonāt make any profit.
Yes. Keep in mind Iām in the UK, so not sure that this would be 100% the same elsewhere. I deposite x number of GBP, and a few days later my account shows the equivalent of my deposit in USD. And for me, there was no FX fee on depositing funds.
I only trade US stocks, so I donāt know how that would work. I would imagine they would charge you an FX fee when buying and selling non-US equities. Hereās a quick read on this: https://www.schwab.com/stocks/understand-stocks/international
I knew about the PDT rule, but then forgot. I only deposited Ā£500 to test the platform, fees, etc. I believe I made 2 or 3 trades after which I had a message saying something like āwe saw that you close positions shortly after you open them / the same day, from now on you can only close existing positions, no new positions can be openedā - something along those lines.
But yes, I spoke to them to get specific details on how this works and tested it on the paper trading side. Having $25k or more in your account means you can trade as much as you want.
What I donāt know and havenāt checked is how much below $25k can you fall before the PDT rule applies again? Because if itās just 1 cent, then they would probably set the minimum higher. So Iām thinking it might be below $20k where PDT applies again, but I donāt know for sure, and this is just a hunch.
As I said above, Iād recomment starting with $30k just to be sure ā which is currently a little over Ā£24k.
Yes, they provide 2:1 leverage (at least to me - not sure if you can ask for more).
If you want to only buy/go long, as you would do with T212 on the Invest or ISA accounts, then you can do it without leverage in the cash account.
You can buy/go long in the margin account, and here it would cost you half as much to buy the same number of shares. Or you can choose to invest the same money and buy twice as much.
They offer low leverage which is ideal for beginners (even pros) which ensures you canāt wipe out your entire account in a blink of an eye.
Seek more info online about margin/leverage and seek Charles Schwabās info pages for more info. Always give them a call for questions, itās best to be safe and know for sure than have doubts.
More info here: https://www.schwab.com/margin
i believe if you purchase non US stock with charles schweb, you have to pay an on going fee to hold them on the platform, but you need to check that.
Thanks for the informative reply, just a few follow ups, so when you deposit gbp then you dont need to manually tell them anything? it will just be converted to usd, and this takes a few days?
When they blocked you from opening new positions how did you get them to unblock you? did you have to ask permission or something? Do you know what triggers it, for instance if you bought then sold the next day would that have been allowed?
Iāve replied but my comment needs to be approved by T212 before you can see it.
Correct. You just deposit. No need to do anything else.
The first time I deposited it took a few days, but I just recently deposited more funds and it took seconds (less than 1 min). So it might depend on the amount, or theyāre usually fast except the very first one. Iām not sure which one.
Their system auto detects your trading pattern and it auto blocks you. Iām almost convinced itās their system and not an actual person doing this.
I didnāt ask them to unblock me. When I spoke to them they said if I was to deposit the required $25k amount, the second it shows up in my account I can day trade, regardless if it was a second after I was āblockedā or the next day or later.
The block is simply a measure to prevent you from losing tons of money, as it happens to the majority of day traders.
I believe if you were to ask them, they wouldnāt āunblockā you because again, itās a protective measure, slowing you down and forcing you to put more thought into the trades you take and generally be more selective.
Directly from their site:
āDay trading involves the purchasing and selling (or short selling and purchasing) of the same security on a single day within a margin account. If you make four or more day trades over the course of five business days, and those trades account for more than 6% of your account activity over that time period, your margin account will be flagged as a pattern day trader account.
If this happens, even inadvertently, youāll be required to maintain a minimum equity of $25,000 in the flagged accountāon a permanent basis. If youāre short of the minimum at the close of any business day, the following day youāll be limited to liquidating trades only.
Schwab may allow a one-time exception to clients who may have been flagged as day traders, as long as they commit to not doing so again.ā
Read more: What to Know About Day Trading Rules | Charles Schwab
Youāre very welcome. Iām glad I can help.
Thanks, I think I will give it a go, I was also looking at IBKR so might try both. How are you finding IBKR in theory? what extra does it give you that CS doesnāt, does it have more types of assets?
How have you been trading on CS just to get an idea? are you opening multiple positions and doing lots of trades each day, I just wanted to know that CS are cool with people doing that as long as they have 25k in the account. Thanks
I havenāt yet tried IBKR yet, but I really need to.
The reason is that from what Iām told thereās more stocks you can borrow and short on IB than on CS.
Currently, 90% of the short setups I find I cannot short on CS, and have to resort to looking at the companies I can short and finding shorting opportunities there.
Yes, CS donāt bother you if you have at least $25k in your account.
Iāve had days when I traded 30 times (that was excessive - I normally donāt trade that much) and everything was smooth.
Normally, I trade as many trades as I can watch at any one time. So sometimes short scalps need me 100% attention, other times day trades set up but take a while to move, so I look and take other positions at the same time.
The most trades I have at any one time are about 3.
2 if theyāre semi-active / moving a bit.
1 if itās really moving a lot quickly and/or I have a close target.
But trialing it too I had 6/7 positions open at one point and there is no issue. You can have 100, it doesnāt matter.
What actually matters is your funds, obviously you canāt take on 100 trades if your capital doesnāt allow it.
If you take smaller positions or have a lot more funds you could have many many trades at once, whether scalps, day trades, or swings and longer-term plays.
So Iāve never been stopped from opening new positions or adding to existing positions, the only exception being when I tried to acquire more shares than my funds permitted me to, so I couldnāt afford the trade, then yes, you canāt open a trade. But assuming you have the funds, you can take as many as wanted.
Thanks thats good to know. Iāve never shorted before, is there any special system you have to use on CS to do that or option you choose?
It sounds like youāre day trading fine on CS for buying low and selling high, even scalping. Are there any negatives or extra expenses compared to T212 apart from the $15 withdrawal fee you mentioned? Any high fx fees or anything?
No, itās very simple. The same way you would buy shares you can also short them. There are multiple ways of course. I personally use shortcuts/hotkeys and the active trader / ladder window, where the price is in the middle, and you can click on the box on the left of price to buy, or on the right to sell (see screenshot below). You can customise this window to your liking. (This is the default).
These are limit orders which is what I use.
Yeah, Iām personally not having any issues.
(Keep in mind I only trade US stocks.)
T212 charges an FX fee (as they should) when you open a trade, and when you close that trade.
Your CS account will already be in USD so thereās no FX fee at all.
Apart from the $15 as mentioned, there are SEC fees which are tiny, almost non-existent, and are only paid when you close a long position (you bought now you want to sell your shares), and when you short. Thereās no SEC fee for buying shares, whether thatās opening a position or covering/closing a short.
Read more here about SEC fees: What Is an SEC Fee? Definition, Rate, How It Works, and Example
To give you an example Iāll list a few line items.
No. of shares ā Price ā SEC fee
2,000 ā 28.25 ā 0.95 ā $56,500 worth of this stock
100 ā 520.55 ā 0.88 - $55,055 worth
500 ā 80.45 ā 0.68 ā $40,225 worth
5,000 ā 4.56 ā 0.39 ā $22,800 worth
3,000 ā 3.93 ā 0.2 ā $11,790 worth
300 ā 1.65 ā 0.01 ā $495 worth
So I think itās about 0.0016% or 0.0017%.
As you can see, these fees are almost non-existent, regardless of whether you make or lose money on the trade.
As far as Iām aware these are the only fees. At least, the only fees I incur.
Thanks, Iāll definitely look into this platform then. How did you choose this one as there are so many out there that are maybe similar?
How do you handle taxes as youāre also in the UK?
One more thing Iāve just remembered from what Iāve been reading, do you have to wait for funds to settle before using them? if you sold all 30k of funds in your account for example, could you use them straightaway or do you have to wait 2 days it seems for them to settle? Iāve read this in a few places.
Kinda just looked at whatās out there, what people say about them, what problems people have with each one, etc.
Itās definitely worth starting with TOS and then maybe transitioning to Sterling or DAS later. Iāve done a bit of research and Sterling/DAS would be the next step, but they do charge, and if you canāt be profitable with TOS thereās no point in using Sterling/DAS.
Iām not that far along. Iāve spent a bunch of years learning and experiment and even trading different methods and techniques, but they all produced sub-par performances and unpredictable results. So Iāve dipped in and out of shorter-term trading many times in the last 5 years or so.
For the most part I was losing (profiting very little if at all sometimes). HMRC (from my understanding) doesnāt care about your losses (meaning you canāt offset your other income with trading losses - again from what I know - I could be wrong), they donāt care until you turn a good profit, then you can offset some stuff with your losses (again, from the little I know).
Now I plan to put it down as earned income, even though the tax is going to be insanely high. They take 40% if you make above Ā£37,701 - that is insane! And when you go above Ā£125,140 they take 45%. So youāre essentially keeping only half the amount you actually make. This is of course totally worth it because you get to live in the beautiful and safe and superior city of London.
Iāve looked into putting it down as self-employment income, or even starting up a corporation, but the calculations Iām making (which could be wrong - Iāve done the best I could) show minimal difference if any.
Some doughnut on YouTube (Sullyās Advice) was saying how (heās UK based too) he pays no tax on any of his profits unless he withdraws them from the company. Dude is straight out lying and misleading people on every one of his videos. Him explaining his trades are horrific, heās got no idea what heās doing. Anywayā¦
Iām personally taking it one step at a time. Earned income, see the tax result. Then take it from there. I asked some people from the US and thereās no difference there either between trading as an individual or under a corporation (except that youāre less likely to get audited when you incorporate).
I spoke to CS support about this a while back. They said in your cash account the settlement for funds is the trade date plus one business day. Now I donāt use the cash account so Iāve no idea if that means, you trade today and you can then reuse those same funds tomorrow, or if it means you trade today and you can use the funds the day after tomorrow. So I didnāt push for more info here as itās irrelevant to me.
However for the margin account (the account that gives you 2 to 1 leverage, and you can short stocks) thereās no withholding period. The second you sell out of a position you can take that same amount and invest them elsewhere.
Thanks, Iām not familiar with sterling and DAS are they brokers or platforms?
Ah ok I thought you were also using the cash account. The 25k minimum applies to both though doesnāt it?
What do you use T212 for if CS handles most things for you?
Platforms, although itās possible they offer both.
No, Iām not.
Correct.
Just the ISA account.
Hey, I just found something rummaging through my files:
I got this when I was making a series of day trades.
So essentially, this is the message you get telling you to slow down when you have less than $25k in your account.
I donāt remember if I got the PDT message after this or whether I stopped when I saw this ā¦
I will confirm with CS but from reading more over the past few days it seems the PDT 25k requirement doesnāt apply to cash accounts, only margin accounts. Not sure if you know more about this?
Ok so you got this message when buying and selling some shares the same day? and now when you have 25k invested in the account, you dont see this issue anymore?
For a while I thought I was reading Charles Schwabās community forum
But it is good to know how things work on other platforms