Although in some ways the PDT rule can be a curse in that it limits you from making more than 3 day trades in a rolling 5 day period. The limitation can also be blessing that prevents you from over trading and shredding your account apart with long strings of losses and the consequent commission expense.
In the last two of my three weeks back to trading (the first one ended break even) I have been guilty of forcing trades when there were clearly no opportunities there in addition to a couple of random day trades! The result of this is that my account is now down 2.26% since I have re-commenced trading in late April of this year. To see all my trades including those I made in the past 3 week, click the following link: http://profit.ly/user/elingford
Thankfully commissions at Interactive Brokers are very cheap and despite my over trading; 12 trades have only cost me about $48.00 in commissions, that is, an average of $4.00 per round trip! This is a sharp contrast to my last broker (Lake Street) at which I was charged $6.50 per trade (buy and sell) (in addition to $150 for their software which was advertised as $120). In other words, these same trades would have costed me a whopping $156.00 instead or more than 3x the cost at Interactive Brokers. This is one of the major reasons I'm reluctant to go back there!
Any ways, that's besides the point. The markets have been horrible since I started back trading and are now in a full fledged correction (I use the $BPNYA and $BPCOMPQ with a 10 day simple moving average to determine this). So I guess in some ways I can still be happy that my account is only down 2.26% despite my over-trading and forcing longs against the tide!
Upon reflection, my trading behaviour is reminding me of when I first started trading at Lake Street around the 1st of August in 2011. The markets had also been at the start of a correction. Further, although I had recognized this, I was forcing long trades every day of that correction (being in chat room that hardly shorted anything during the entire correction didn't help either) and to make matters worse I was abusing my new found freedom from the PDT rule to jump in and out of the 3x ETFs racking up small losses and commissions which added up to huge sums at the end of the days!
So by the time the correction had ended and the markets bottomed out in October 2011 which led to the eventual rally that ended in March/April 2012; both my account and my confidence had been shot and I was no where to be found to take advantage of this "easy money" period!
I said all that to say that I find it quite ironic that I started back trading in similar market conditions and also exhibiting similar trading behaviour. As the saying goes...fool me once shame on me...fool me twice shame on you...it would really be re-miss of me to repeat the same mistakes I made in the summer of 2011. Having recognized this I vow not to repeat that same careless trading behaviour. But that does not mean I don't plan to make any trades.
Apart from becoming a much more disciplined and patient trader at this point; I have become far better at recognizing intra-day chart patterns than I was last year and at aligning daily chart patterns with intra-day chart patterns before buying/selling. I plan to put these skills to use day trading primarily earnings break outs only when "perfect set ups" are presented to me in an effort to execute one good trade; one good trade; one good trade after another! I will stay away from trading stocks on my nightly swing list since the correction means that the odds are not in favour of longs but also intra-day volatility and over night gap ups are making it extremely difficult to swing short stocks! Over nighting any thing either long or short except stocks with fresh news is too risky in this market and more of a guessing game.
I also know I'm much more comfortable trading a retail account ( I don't feel like I have to force trades to make a minimum number of trades for the month to avoid the software charge) and I don't mind being under the PDT while I try to regain my bearings and become a consistent trader once again. Besides I only need a couple months of solid trading to get over the $25K mark since I'm not too far away :) Consistency means a lot more to me at this point because once I achieve that my account will grow. I have done it before and I know I can do it again.
So here's to closing out this month with profits and to many more profitable months in 2012!