30:1 Stock Daytrading Leverage...

[trader613]

😱New to this forum and wanted to pick a few traders brains...wondering if anyone here has used http://www.worldwidetradingcapital.com. I've got a fellow trader who is using them and seems quite happy with it...but thought I'd do a bit more research before I jumped in.

According to him, they give him 10 times his cash for daytrading and he only had to put up $5,000 to get in with them. If anyone has dealt with them and has opinions, I've love to hear...😱

 

[upordown]

not very cheap

😱New to this forum and wanted to pick a few traders brains...wondering if anyone here has used http://www.worldwidetradingcapital.com. I've got a fellow trader who is using them and seems quite happy with it...but thought I'd do a bit more research before I jumped in.

According to him, they give him 10 times his cash for daytrading and he only had to put up $5,000 to get in with them. If anyone has dealt with them and has opinions, I've love to hear...😱

after your post, i looked into WTC's site. They are not that cheap. In addition to incoming and outgoing wire fees and the $100 setup fee, the cheapest platform you can get is $100/month + exchange fees which range $10-50/month. But the real kicker is the margin fees they charge on your money to leverage it: for that $5k you put up, they are going to charge you about 35%/year, or $150/month, which is $1800/year. But don't forget about ticket charges. guessing you might pay 1c/share, and you trade about 3k shares a day, at 1c/share, that's $660/month (22 days on avg in month). So let's recap - $100 setup fee, $10 wire in fee, $100/month platform fee, $10/month exchange fee, $150/month margin fee, and about $660/month in ticket charges. That is a minimum of $920/month. That's steep. And that's assuming all your trades are at least breakeven. What if you lose money. You will be out $5k in about 4-5 months. That's how these places stay in business. You are better off trying to get a job on a trading desk, even as a coffee maker/lunch getter/drycleaner getter.

 

[upordown]

by the way, as you might be able to tell, i'm not a newbie to the business. I have over 7 years trading experience.

 

[marlintrdg]

after your post, i looked into WTC's site. They are not that cheap. In addition to incoming and outgoing wire fees and the $100 setup fee, the cheapest platform you can get is $100/month + exchange fees which range $10-50/month. But the real kicker is the margin fees they charge on your money to leverage it: for that $5k you put up, they are going to charge you about 35%/year, or $150/month, which is $1800/year. But don't forget about ticket charges. guessing you might pay 1c/share, and you trade about 3k shares a day, at 1c/share, that's $660/month (22 days on avg in month). So let's recap - $100 setup fee, $10 wire in fee, $100/month platform fee, $10/month exchange fee, $150/month margin fee, and about $660/month in ticket charges. That is a minimum of $920/month. That's steep. And that's assuming all your trades are at least breakeven. What if you lose money. You will be out $5k in about 4-5 months. That's how these places stay in business. You are better off trying to get a job on a trading desk, even as a coffee maker/lunch getter/drycleaner getter.

Out of curiosity I emailed a link of this post to the guy at Worldwide Trading Capital to get his side of the story:

To be clear, I would never recommend anyone trade US stocks at such high leverage even through spreadbetting accounts or CFD's the FTSE100 shares using such trading vehicles can get one in enough trouble without interjection of the higher volatility and stock prices of the US stock market IMO.

Anyway this was his response emailed to me:

In response to your questions about pricing and fees from the link set to me via email:

· Most firms will have both incoming and outgoing wire fees. These are not charged by the capital group, but rather by their banks and rather than eating those fees, the firms, understandably, pass those along to their clients.

· If the $100 set up fee is an issue, I would be more than happy to waive that for you. This is what keeps our firm in business, but we’re always open to working with clients to create the right fit.

· The InstaQuote platform is offered FREE for the first 30-days and then is indeed offered by the designated brokerage firm for $99/month + exchange fees. These are DMA (Direct market access) platform providers, much different from “online systems” and most of them do in fact charge monthly software fees.

· On the monthly leverage fees, if you come in with $5k and gain access to the equivalent of 10 times your cash or $50k and cannot make the $150 monthly fee through trading profits, then you probably should NOT be trading. It’s a pretty simple equation to factor those fees into a trade-by-trade basis, assuming you make 10 trades/day for 20 days, that would average out to $0.75 per trade.

· On the commission side of things, every broker on the planet is going to charge commissions and ECN fees for equity trading…that’s just simply how they make their money. The brokers that our affiliate capital groups work with typically will enable you to choose from several different pricing arrangements, either on a per/ticket or per/share basis, which is often not the case with most firms.

So, as the post stated, “let’s recap” by using a trading scenario assuming you do in fact deposit the minimum $5k to get started:

Trading Leverage: $50k intraday, $20k overnight

Average trades/day: 10 round trips = 20 tickets

Average shares/ticket: 1000

Average price/share: $.08 or $8.00/1000

Average ECN/ticket: $2.00 (assuming removing 75% and adding 25%)

Monthly leverage fees: $150

InstaQuote fees: $118 (including data fees)

Based on the above numbers, you’re total monthly fees would be:

Daily: 20 x $10.00 = $200/day

Monthly: $4000 + commissions & ECNs + $118 + $150 = $4268 total monthly fees. Now, take that and break it down on a trade by trade basis, assuming the 400 tickets/month and you would have to cover $10.67 in average profits per ticket…not a lot!

Trading is about crunching the numbers and the post is certainly correct in breaking down the figures to see if this makes sense as I would do the same. Bottom is that whether the numbers work is really different for every trader and depends on a lot of factors, ie. Average shares, risk tolerance, etc…Leverage is a double edged sword, and when used properly can make these numbers work to your advantage, but used improperly, can make this a very big hill to climb.

Once again, be very careful with leverage, even the big boys get wiped out from it all the time.. If you are going to trade US stocks at such high leverage, consider options, but even that can bite you badly if you don't have a very good plan..

Of course I do concede that many gifted traders make a good living trading this way, its just not for me and I think I should make that very clear..

mar....

edit: I did get his ok to post this response..

 

[johnblaze]

So did this turn out to to be good, reputable firm ?

And for the record, I wouldn't pay an account setup fee either.

 

[madmentrade]

What a rip-off!

Try giving Gil Young Jo at Next Level Trading a call.

His reputation as a trading coach is probably the hottest right now on the street.

Check out his blog: Day Trading Blog

He has helped a lot of struggling traders turn profitable. Luck!

 

[israe]

My broker gives 20:1 for stock daytrading, and 10:1 for overnight, for similar minimum investment.

 

[iwillsurvive]

My broker gives 20:1 for stock daytrading, and 10:1 for overnight, for similar minimum investment.

What broker is that?