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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Wayners who wrote (2075)2/13/2000 2:52:00 PM
From: Dan Duchardt  Read Replies (1) of 2120
 
Wayne,

Since intraday calculations of rule 2520 and Reg T are not allowed, you're buying power is not altered by selling AMZN intraday.

Thanks for this clarification. I though this was the case, but I needed to be sure. My uncertainty on this point comes from trying to sort out the implications of the proposed rule for people who do not have $25,000. My understanding of the proposed rule, and the definition of "pattern daytrader" is that if you don't have $25,000 you will not be allowed to daytrade in a margin account unless you do less than 4 daytrades every 5 days (and not at all if you have been "educated", or have somehow demonstrated intent).

The question becomes wether or not you can "daytrade" in a cash account. That is to say, can I repeatedly buy and sell stocks in a cash account during the day as long as I never own more than my account equity at any one time? I know there are brokers letting people do this in cash accounts. There are others who say it's free-riding and limit total spending to available equity. What's going to happen if/when the revised rule 2520 is adopted, and all the "little guys" flock to cash accounts for their daytrading?

Dan
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