If you’re planning on opening a Cobra Trading account with the minimum amount of $27,000, there’s a few things of which you should be aware.
Pattern Day Traders are required by law to hold a minimum of $25,000 in their account, meaning if you were to start with $27,000, you would only be $2,000 away from hitting the legal bottom line. This close proximity can put you under pressure, which could negatively affect the way you execute your trades.
For example, once you’re too close to the PDT minimum balance, you may start basing your decisions on how much of a buffer you have. This is dangerous, because it can distract you from doing what makes sense for a particular trade you’re entering. It might also change your risk aversion and the way you conduct your profit and loss analysis. Alternatively, you may feel inclined to shrink down your position size, which will slow down your growth over time. Being so close to the bottom line has the potential to greatly diminish one’s growing potential and overall performance.
However, there are several ways to get around these potential problems.
The most obvious solution is starting with a higher balance, or depositing more funds when your balance gets too close for comfort to the $25,000 limit. This way, you significantly lower your chances of dipping below that line, allowing you to trade without the pressure to constantly check your balance.
Another way to bypass these issues is to make sure you pick your trades wisely, taking up only the best of the best setups. By being extremely selective with your trading actions, you set yourself up for as few losses as possible.
Needless to say, the latter requires plenty of knowledge, experience, and discipline. However, sticking to it is a great way to build healthy day trading habits. Developing a thorough trading plan and following it closely will benefit you throughout your trading journey, regardless of the size of your account. Having a disciplined mentality will help lead you to become a more methodical and consistent day trader while helping to keep your account further from crossing the PDT threshold.
Whichever path you choose, do what works best for you and what will match your trading style. If you have any questions, feel free to contact us. At Cobra Trading, we offer extensive customer support and informational materials to help you become a successful day trader.