Can you trade stocks inside retirement or ESA account?

[KTP]

BTW, here is what the trading account looks like (notice that YTD return from doing these type of swing trades )

http://oi44.tinypic.com/ncz0o8.jpg

[Nika]

To answer another question you didn't ask: if you withdrew say, $6,000. $5k would be completely tax free. The extra $1000 would be taxed as ordinary income, with an additional 10% penalty.

Not that I intend to do it, but if over 5 years I contributed 25K, than couldn't I do it to the tune of 30K now?

Please tell me that you coded your contribution for 2011... you have up until April 17th to make 2011, and the whole rest of the year for 2012

I coded it 2012, I maxed out 2011 in 2011.

BTW, I already "lost" $20 (unrealized).

If you thought you were sick to your stomach about not letting some of your Apple stock ride for a little more profit, that's nothing compared to having a stock drop 40% or more and you keep holding onto it "knowing it'll come back" and it never does. Just limit your losses.

I had most of my EF in playing with apple, so that was nerve wrecking. And it was an opportunity that won't repeat itself. I'm going to be doing this with less than 1/10th the amount and without major expectations.

[jpg7n16]

Not that I intend to do it, but if over 5 years I contributed 25K, than couldn't I do it to the tune of 30K now?

You can always withdraw your entire historical net Roth contribution at any time, completely tax free.

Net contributions = Contributions - withdrawals against contributions

Scenario A) If you did $5k a year to your Roth for 6 years, that would be total contributions of $30k. Assuming no withdrawals, net contribution is still $30k. If that $30k doubled to $60k, you could withdraw up to your $30k of contributions and leave the $30k of earnings in the account - with no taxes due whatsoever.

Scenario B) If you did $5k/year for the past 10 years, you've contributed $50k. But last year you took out $15k from your Roth. That leaves $35k net contributions that you can w/d this year tax free.

Scenario C) If you did $5k Roth at Vanguard last year, and $5k Roth at Scottrade this year - the Scottrade account doubles to $10k - you can withdraw all $10k from Scottrade completely tax free. What matters is the amount you have contributed historically to all of your Roth IRAs, not necessarily the brokerage firm you take the w/d from.


Investopedia info: Roth IRAs: Distributions | Investopedia

Official wording: Publication 590 (2011), Individual Retirement Arrangements (IRAs)

I coded it 2012, I maxed out 2011 in 2011.

BTW, I already "lost" $20 (unrealized).

Wouldn't worry about the $20.

I thought you said you just opened the account... Was that a traditional contribution last year? If it was a Roth too, why did you change brokerage firms?

Definitely glad you made your contribution last year just wondering what happened

I had most of my EF in playing with apple, so that was nerve wrecking. And it was an opportunity that won't repeat itself. I'm going to be doing this with less than 1/10th the amount and without major expectations.

Well sure. Putting your EF in AAPL is nowhere near the type of security you need for emergency money. That's why we always say 3-6 months expenses in CASH. Cash won't fluctuate and run the risk of losing a ton. Your opinion of AAPL as an investment aside, it is too volatile in the short term for EF money.

Stocks are definitely not recommended for your EF money. Certainly recommended for your retirement money though.

[kv968]

how much are trades at Scottrade? You want to be paying less than $5 or so per trade to make this work well. If you had looked into my advice for Optionshouse, they also give you 100 free stock or option trades for opening a normal or IRA account with minimum $3000.

Scottrade is $7/trade for equities and $7+$1.25/contract with options. Although I like Scottrade, I'm thinking about also opening an account with Optionshouse...cheaper commissions, especially with options.

Even though Scottrade allows you to buy options, they only allow you to sell covered calls. To do anything else and have access to decent P&L Charts, Vol Charts, etc... you have to open an account at their separate optionsfirst site.

[kv968]

You could do a trailing stop order. That way if it drops from purchase price you're protected and if it goes up and then turns around, you get out before you lose the profit you've made, but if it continues to climb, you don't sell too soon and miss the run up. That kind of covers all bases.

A trailing stop is even better if you don't plan on monitoring the trade regularly and adjusting the stop manually. I check my positions daily so I just adjust my stops accordingly when needed.

However with either, trailing or just a basic stop, I'd recommend you don't use a stop/LIMIT loss since that somewhat defeats the purpose.

[KTP]

the MMs are too good at taking out stops with bear raids then the price goes shooting right back up. They can even do this on days with no negative news.

I prefer to sell half of a position when I want to lock in profits, then let the other half rise or fall. If I still believe in the stock when it falls back to my purchase price, I rebuy. This has worked quite well in Nokia and I plan on implementing it with ALU also (I wish I had gotten into that one in Jan though for $1.40).

[kv968]

the MMs are too good at taking out stops with bear raids then the price goes shooting right back up. They can even do this on days with no negative news.

I prefer to sell half of a position when I want to lock in profits, then let the other half rise or fall. If I still believe in the stock when it falls back to my purchase price, I rebuy. This has worked quite well in Nokia and I plan on implementing it with ALU also (I wish I had gotten into that one in Jan though for $1.40).

Getting taken out definitely does happen. I know I've seem to have been a victim. Regardless, I still like keeping stops on most of my trades just in case the unthinkable happens. I just strongly suggest it for those that may not frequently monitor their portfolio. Nothing worse than checking the account a month or two later only to find out your stock is down 50%. Well maybe checking your account and finding out that you were stopped out and now the stock's up 50%

I like to lock in profits and letting some ride like you do, but some of my positions are too small to justify doing that with the commissions involved. Usually in those cases I'll just really tighten up my stops.

And it's funny you mention ALU. I just recently found out that my parents had bought some a while ago so I've been somewhat watching it. Unfortunately, they have no clue about stocks (I don't even think they know why they bought it) and got in somewhere around the $10-11 range. Again, a stop loss would have helped immensely. Now I'll just have to keep track of it myself to see if there's a good trading opportunity. Might be a good buy if it gets down to the $1.75 range again.

[KTP]

Getting taken out definitely does happen. I know I've seem to have been a victim. Regardless, I still like keeping stops on most of my trades just in case the unthinkable happens. I just strongly suggest it for those that may not frequently monitor their portfolio. Nothing worse than checking the account a month or two later only to find out your stock is down 50%. Well maybe checking your account and finding out that you were stopped out and now the stock's up 50%

I like to lock in profits and letting some ride like you do, but some of my positions are too small to justify doing that with the commissions involved. Usually in those cases I'll just really tighten up my stops.

And it's funny you mention ALU. I just recently found out that my parents had bought some a while ago so I've been somewhat watching it. Unfortunately, they have no clue about stocks (I don't even think they know why they bought it) and got in somewhere around the $10-11 range. Again, a stop loss would have helped immensely. Now I'll just have to keep track of it myself to see if there's a good trading opportunity. Might be a good buy if it gets down to the $1.75 range again.

I went ahead and got in it last week at $2.44. It could very well double in the next 6 months. Anyway, I like the risk/reward on this one.