Stock Trading and Other Things

What rules/restrictions do I need to look out for when doing light day trading?

I want to open a Scottrade account w/ the minimum $500 and try some light day trading. I just want to see if I can make some successful trades and grow the money. I can afford to lose the money if that happens. I only plan on doing it when I have free time. I understand the risks involved when people get in over their heads, but I am simply wondering about any rules & regulations that I might not be aware of. Anyone with experience or knowledge involving the SEC, IRS, Scottrade, etc. would be very helpful.

Public Comments

1. there are several books on this and it is all about developing your own system lots of people will tell you systems but they will only work with you if you have the same mind set as them i would advise you read 'trade your way to financial freedom' by van k.tharp he goes into depth on how to develop your own system

2. Scottrade is actually not the best broker to day trade with; They route all their traffic through a single market maker (Knight, if memory serves). Their platform is also just not up to snuff. I have a Scottrade account and use it only for swing and long term trading in my IRA. Its more suited to investing or longer term trading time horizons.

If you really want to day trade, I'd suggest opening an account at TD Ameritrade or Interactive Brokers (I have accounts at both). They both have solid trading platforms and also have simulators you can trade with live market data before you go live with real money. Interactive Brokers offers per share commission rates (rather than per trade), which are generally preferred if you're day trading.

In terms of rules/restrictions, in order to day trade stocks, you generally need a margin account with a minimum balance of $25K. But you can daytrade futures and Forex at many firms with only $500, but those are highly leveraged instruments (>50:1) so be careful!