Trading With A Small Account

You run into other problems besides PDT rule if you’re trying to do this with a small account. Trading the S&P for example, you can buy 1 contract with $500 margin. Yet say you’re trading SPY, and say for simplicity’s sake it’s at $100 per share. If you wanted to buy 100 shares you already need $10k right there, and that 100 shares would only get you $30 on a 30 cent price retracement. Minus commissions. And if you’re scaling into that 100 shares, you’re going to may multiple commissions which will almost assuredly be more than the $30 profit you make. (Day) Trading stocks requires a much, much larger account size and you still don’t get the margin that you do with futures.

I swing trade stocks with a similar strategy to this. The one thing I like much better about stocks is that you can use selective position sizes (eg. you’re not locked into a minimum size of one contract with its tick sizes) which makes hedging a lot more comfortable. I don’t usually hedge with equal sized positions in either direction because I have a bullish bias over time when it comes to the stock market. Using 2x ETFs makes this even more accessible if you’re not worried about decay over time. I think I mentioned before, the majority of my wealth, including my entire futures trading account, comes from heavily averaging down into the weighted ETFs during the huge drop at the end of 2008. I modified the rules a little during that time, however.

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