I mentioned early this month that I bought 600 shares of Citigroup (C) on the day when the stock was traded below $1 for the first time ever. From where the stock is traded now (it closed at $3.08/share on March 18, 2009), it seems that my bet is a good one, even though I didn’t get my shares at the lowest price. And C isn’t the only stock I bought recently. In fact, I see the recent sharp decline of stocks as an opportunity to buy. Since February, I have added $4,000 new money into my Scottrade account and used to money to buy more stocks.

In addition to Citi, I also snapped up 222 shares of Bank of America (BAC) last month when the stock was hammered by fears of nationalization. When Sirius XM Radio (SIRI) was rumored to seek bankruptcy protection in February, I bought 340 share with the $35 cash left in my Scottrade account. Other recent purchases are:

All these purchases were made with free trades I earned from Scottrade (I probably don’t need Zecco’s free trades any more). While it’s nice to trade without paying commission, Scottrade does have some restrictions that makes trading a little difficult. I usually don’t keep any cash in my account. When I saw something I want to buy, I deposit the money into my account in the early morning. The problem is, according to Scottrade’s rule, the money can’t be used to buy stocks under $4 right away and as we know, many decent stocks are traded below that level now. To buy stocks below $4/share, the fund, transferred via ACH, has to be cleared and that takes full three business days (no such restriction if the money is wired to the account though). Given how volatile the stock market has been lately, anything can happen in four days. I asked Scottrade for reason and one explanation I heard, but don’t think it makes any sense, is stocks below $4 are not considered as stable. And this isn’t the only restriction. Once I was trying to use unsettled fund to buy Kongzhong (KONG), but my order was rejected even though the stock was traded around $5.00. I called in and was told I can’t place internet trade order on some thinly traded stocks with unsettled fund. Those stocks can only be bought through the broker. Since there isn’t a list of stock with extreme low trading volumes, there’s no way to know in advance what order has be made through a broker.

All these policies are to protect the broker. While there’s nothing wrong with that, it does cause confusion and inconvenience.

Original Post on The Sun's Financial Diary