Oops posted this to the wrong thread earlier ... seems more relevant here.
JBat said:
By all accounts, it seems like SB is the unloved nursery where many traders began their market careers.
Spot on Jbat.
But possibly some misconceptions follow?
but again, it's a lot easier to run a tight ship with a SB account
Despite price and execution delays, requotes, tight stops not being permitted, trading their market not the underlying, suffering wider spread than the underlying, possible tax issues if only source of income, trading against them not other traders, not knowing immediately if a stop has been executed or not, pitifully inflexible order types, poor platforms, being put on manual or even turned away if consistently profitable?
A panoply of negative edges there for the (day) trader to surmount.
A support level on the underlying holds while the SB chart dips through it. Which chart are you watching, theirs or the market's? How does this affect what may be a crucial decision? What price will you get if you go long or short at this point? SB can be frustratingly indirect. A few ticks here and there matter.
than it is to drum up £50,000+ to trade elsewhere
A futures account can be opened for £2500, sometimes less. Futures can be used to trade indices, major forex pairs and commodities to name but three. The only other barrier to entry here is the minimum position size, e.g $5 per point miniDow; $6.25 per point cable; S&P $50 per full point. A 20 point stop on 1 lot of the miniDow will only cost c£54 if hit.
Granted, a stock day trader needs $25k minimum but can swing trade with much less as long as PDT rule is not broken. A stock trader does not suffer from minimum position size constraints as she can trade 1 share if so desired.
Besides, anyone who wishes to trade for a living would be unwise to do so with less than $25k imho, especially if they are relatively new.
It's the leverage that is the beauty of it too!
Futures offer equivalent leverage.
Stock traders usually enjoy at least 4:1 leverage.
rols said:
They fill a space in the market for the under-capitalised newbie trader dipping their tootsies in the toxic swamp that is the financial markets.
Indeed, SB may be the only way of trading small accounts of < say £2000.
SB may be the only way of trading positions below a certain size.
SB can be useful for trading longer term positions, when the execution etc. issues become insignificant.
SB have tax advantages in some, but not all, circumstances.
SB offer guaranteed stops (for a premium) for the nervous.
If none of the quintet above apply and/or you intend to daytrade for a living I would strongly advise against using SB.
rols said:
Transferring funds in and out is a breeze.
It should be a breeze with a reputable broker too, although perhaps not so much of one that a late night drunken impulse can be immediately brought to debit card fruition.
Their customer service compared to IB is like comparing Florence Nightingale to Dr. Mengele.
LOL they must be lovely at CapitalShipman. Trying having a chat with the nice gentleman from deal4free for a refreshingly different perspective.
They are a good incentive for many to continue with their paper rounds.
Indeed, it's more agreeable to whittle away a small account than a large one.
Yes all of this has been repeated with mindnumbing tedium and I apologise for adding nothing to the argument by doing so yet again. But it struck me that a lot of people seem somehow scared of what they perceive to be "proper" trading accounts when there is no need to be. If anything it is the SB account that should elicit the greater degree of - if not terror - caution.
Moving from SB to direct access is one of the most delightful transitions a trader serious about his craft can make.
franleychan
