How Many Trades Can You Make in a Week? No Limits, But Mind the Rules
As an active trader and gaming enthusiast, you may be wondering – can I execute as many trades as I want each week?
The answer is yes, no restrictions on total weekly trades. However, if you find yourself frequently dipping in and out of positions within market hours, pay attention to pattern day trader rules. Let‘s examine why…
Understanding the Pattern Day Trader
You are deemed a "pattern day trader" (PDT) by FINRA if both of the following apply:
a) You trade 4 or more times in 5 business days
b) Those intraday trades make up over 6% of your total trades for that period
For example:
- You executed 10 trades last week
- 6 of those were intraday (opened and closed position same trading day)
- 6 intraday trades ÷ 10 total trades = 60% → flagged as PDT
But what if you come close to the limits – say, 3 intraday trades over 5 days? Technically you may not trigger PDT status, but still consider constraints if trading very actively…
Implications of Active Intraday Trading
If flagged as a PDT, you must maintain $25k+ minimum equity to continue trading without restriction. Otherwise, your account faces a 90-day freeze on day trades.
Additionally, frequent short term trading typically incurs:
- Higher commission fees, which add up
- Increased tax liability from short term capital gains
So tread carefully before ramping up both trade frequency and intraday activity. Check your brokerage statements to gauge costs.
Now you may be wondering…why do so many traders fail if it‘s so easy to execute endless trades per week?
Why 90%+ of Day Traders Lose Money
A 2022 SEC study revealed that over 93% of active retail day traders lose money. Even among the rare profitable traders, over 75% still don‘t beat market returns long term.
Let‘s analyze the pitfalls behind these dismal failure rates:
Overtrading Out of Boredom
With zero restrictions on trades per week, it‘s tempting to overtrade when the market lacks action. But veterans warn against forcing mediocre trades just to combat boredom. This leads to frustration and revenge trading when forced trades fail.
Instead, they suggest viewing market downtime as paid "tuition" – use it to build your knowledge and strategy. Walk away when good trades don‘t materialize.
Revenge Trading After Losses
All traders inevitably take losses. But newbies often attempt to immediately win their money back by throwing good money after bad, taking reckless trades hoping for a quick turnaround.
In reality, nothing improves by angrily chasing trades. Veterans emphasize accepting losses as part of any strategy, then calmly analyzing what went wrong before proceeding.
Overleveraging
With multi-monitor setups, seeing your buying power flash in the thousands fosters temptation to overleverage.
But as the pros emphasize: never risk more than 1-2% of your account on a single trade. No matter how alluring that lottery ticket FD call seems…
Lack of Risk Management
Veteran traders stress that limiting losses through smart trade planning and mental discipline is even more crucial than hitting winners. As the adage goes:
"Take care of your losses and your profits will take care of themselves."
But without clear loss limits in place beforehand, it only takes one devastating loss to demolish weeks of progress. Risk comes first.
Veteran Guidance: Start Slowly
When asked about frequency, experienced traders universally suggest starting slowly…very slowly.
Hall of fame trader Jesse Livermorefamously aimed for just 3-4 trades per week early in his career.
Famed investor Paul Tudor Jones echoes:
"Don‘t focus on making money; focus on protecting what you have."
Reinforcing that effective risk management trumps quantity of trades.
Here‘s a compilation of guidance from profitable veterans on finding your ideal pace:
"Execute one trade per day at first, two trades max. Wait to increase frequency."
"Set a loss limit to define your risk appetite. Only then determine position sizing and trades per week to match."
"Build patience and discipline before chasing volatile momentum stocks – start slower with ETFs and blue chips."
The key takeaway? Start conservative, focusing on quality over quantity. Master that basic rhythm before considering more trades.
Top 10 Trading Rules from Millionaire Traders
Let‘s examine the key principles echoed by almost every consistently profitable trader:
| Rule | Description |
|---|---|
| 1. Define Strategy & Stick to It | Clearly define your edge, reasons for entering and exiting trades before starting. No straying from your strategy. |
| 2. Cut Losses Quickly | Set and stick to stop loss limits before entering any trade, no exceptions. Never average down losers. |
| 3. Limit Position Sizing | Risk only 1-2% of account per trade. Overleveraging leads to forced liquidations. |
| 4. Avoid Revenge Trading | Resist immediately attempting to win back losses right after they happen. |
| 5. Don‘t Chase Trades | Patiently wait for your setups; forcing mediocre trades leads to overtrading. |
| 6. Review & Refine Strategy | Track detailed statistics to constantly refine your edge over time. |
| 7. Study the Greats | Read books & biographies of successful traders for wisdom. |
| 8. Keep Emotions Checked | Don‘t get euphoric over wins or despondent over losses. Stick to the numbers. |
| 9. Take Breaks | Step away when you‘re in a bad headspace or if losses/frustration pile up. |
| 10. Stay Patient | Wait for quality setups instead of overtrading. Sometimes the best move is no move. |
Now that we‘ve covered core trading rules and psychology, how does active trading differ from simple gambling?
Key Differences: Trading vs. Gambling
On the surface day trading seems synonymous with gambling – buy into volatile momentum, cash out quickly. Both trigger excitement. But professionals argue otherwise:
| Metric | Trading | Gambling |
|---|---|---|
| Objective | Execute strategy with edge | Hope for lucky outcome |
| Timeframe | Minutes to months | Seconds to hours |
| Approach | Defined criteria for entry & exit | No criteria; random bets |
| Risk Control | Strict stop losses, limit position size | No stop loss; bet size varies |
| Success Rate | Still low but can win over time through practice | Totally random outcome |
| Mentality | Detached statistical mindset | Emotionally invested |
| Outcome | Consistent profits possible over years | Guaranteed loss over long run |
Smart traders use tactics, risk management, and odds to turn this from gambling into a business. But it takes tremendous skill and practice over years to reach that point – very few make it through the gauntlet.
Can You Realistically Earn $500+ Per Day Trading?
Stories of four figure trading days undoubtedly tantalize any gamer glued to screens. But what‘s the realistic probability of that $500 daily dream?
First, you absolutely can generate that income level. However, maintaining it requires truly elite talent.
Professional Dennis Dick analyzes that likely only the top 1% of 1% of day traders extract $500+ from the markets daily over the long run.
Still, if truly driven, that seven figure income does exist.
Trader Marcello Arrambideserves documents earning well over $500 daily thanks to ruthlessly calculated swing trades concentrated in just two hours a day. He emphasizes having fixed rules for entries, stop losses, and position sizing above all else.
Fellow seven figure trader Tim Grittani also credits risk management for his success, now solely trading breakouts in large cap stocks.
While these traders represent the very peak, their stories reinforce that with practice, surviving the early learning curve trading professionally remains possible. But expect long brutal hours filled with pain.
Wrap Up: Mindfulness Over Endless Trades
So in summary, no legal barriers exist limiting you to X trades per week or locking your account (unless labeled PDT).
But the veterans unanimously warn against reckless overtrading.
- Mindfulness, patience and strategy matters far more than quantity.
- Start slowly. Master your craft before increasing frequency.
- Keep a detailed trading journal tracking every trade. Strive to improve that all-important win rate over time as you refine your edge.
- Remember, even the best traders lose 40-50% of the time. Managing those losses separates success from failure.
The markets offer endless opportunity for thinkorswim traders. But bet responsibly armed with strategy, risk controls, and consistent practice.
May your trades be fruitful and your gaming rigs ever ascendant!
