Recently, I decided to open a brokerage account with Zecco. They offer 10 free trades a month if you have at least a $2500 balance. Because I wanted to try stepping into the shark-infested waters of day trading, I figured this would be a good way to get a little experience while minimizing my commissions. After you use up your 10 free trades, it is $4.50 per trade. Due to the amount of capital I deploy on a trade, that $9 on a round-trip would eat up almost all my profits.

However, being able to make 5 free round trips each month is pretty good, especially considering the 'pattern day trader' rule. You can only make about 12 roundtrip intra-day trades each month. You can hold positions overnight as much as you want, but I'm mostly interested in the intra-day action.

Currently, I employ a long-only strategy. I am converting my account to a margin account to play the other side of the market - it is essential for an intra-day strategy.

basic info for trades in February 2008 (roundtrip delta includes commission and transaction fees if applicable)

• 2/01/08 11:17 Buy 500 CBOU (Caribou Coffee) @ $2.828 Net: -$1414
  • 2/04/08 9:30 Sell 500 CBOU @ 2.95 Net: $1474.95 Roundtrip delta: +$61.95
• 2/01/08 11:26 Buy 300 JMBA (Jamba Juice) @ $3.05 Net: -$915
  • Position still open. JMBA currently @ 2.51 per share. Current delta: -$162

• 2/07/08 11:53 Buy 200 AMD @ $6.44 Net: -$1288
  • 2/07/08 12:17 Sell 200 AMD @ $6.50 Net: $1299.97 Roundtrip delta: $11.97

• 2/08/08 10:35 Buy 200 AMD @ 6.47 Net: -$1294
  • 2/08/08 2/12/08 12:26 Sell 200 AMD @ 6.36 Net: $1271.97 Roundtrip delta:-$22.03
• 2/12/08 12:07 Buy 200 AMD @ 6.51 Net: -$1302
  • 2/12/08 12:17 Sell 200 AMD @ 6.5601 Net: $1311.99 Roundtrip delta:$9.99
• 2/15/08 10:49 Buy 200 AMD @ 6.54 Net: -$1308
  • 2/19/08 10:22 Sell 200 AMD @ 6.70 Net: $1335.47 (commission to sell - no more free commissions this month!)Roundtrip delta:$24.47
• 2/22/08 11:15 Buy 230 AMD @ 6.66 Net: -$1536.30
  • 2/22/08 11:27 Sell 230 AMD @ 6.71 Net: $1538.77 Roundtrip delta:$2.47
• 2/27/08 11:56 Buy 100 AMD @ 7.24 Net: -$728.50
• 2/27/08 12:00 Buy 130 AMD @ 7.25 Net: -$947
  • 2/27/08 12:43 Sell 230 AMD @ 7.31 Net: $1676.77 Roundtrip delta:$1.27 (I paid $13.50 in commissions for this roundtrip because I modified my partially filled limit buy in order to not be stopped out of the trade. This proved unnecessary.)
• Total Commissions for February 2008: $27

So my realized profit is $90.09. However, I am sitting on -$162 in paper losses on my JMBA position, bringing my total realized and unrealized delta to be -$71.91

There were a two points I could have cashed my JMBA position out and been sitting on $50-20 worth of profits. There was one point this past week I could have closed out the position and been sitting at about $10 of realized gains. Given the market conditions, I feel I did reasonably well. Given the market conditions, I should not be holding onto that JMBA stock. I should have closed the trade a $20-30 loss on that same day I bought it. You live you learn. Rightly or wrongly, I have chosen to ride out my decision on JMBA. However, I will likely close out the position at the end of the year even if it is a loss, in order to possibly better my tax situation (this would make my JMBA losses count as short term capital losses for 2008).

Lesson? Don't keep an open position on a micro-cap stock that's just mostly trending with the current bear market. As an aside, $2.50 is an excellent price for JMBA, one well below book value at a P/E of around 7.8 - unfortunately I bought at the height of a bear market rally, and have not seen the price of JMBA crawl back to even $3 yet.

All in all, not a bad start to trading considering the current market environment. I just wish I could have gone into March without depositing a little bit of extra money in order to get the 10 free trades from Zecco in March. Conceivably my JMBA could spike and I could get the free trades, but I'm not going to bet on it. (Zecco just requires that at one point during the month your account be >=$2500, if it is, you get 10 free trades that expire at the end of the month.)

Paying commissions = murder!

Even though I executed 3 profitable AMD trades while paying commissions, the two trades where I payed round-trip commissions have miserable profit margin. In part, this was psychological in that I wanted to make sure I wouldn't be paying just for the pleasure of making these trades, so I tended to cut my profits a bit early - although one of them was a perfectly executed scalp in the long direction during bear conditions that pulled out almost the maximum profit.

It's worthwhile to note that if I had simply initiated the very first AMD position of 200 shares @ $6.44 and kept it until this last friday, I could have easily sold the lot for $7.20+ a share, netting a profit of $152. My system, particularly in this turbulent market, does not give me such distant insight into stock prices. I am only able to trade my beliefs about the market.