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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: Wayners who wrote (2080)2/13/2000 11:13:00 PM
From: Dan Duchardt  Read Replies (1) of 2120
 
Wayne,

I'm sure you make a valid point, but the facts in this case are that the prohibition on same day sales is disclosed in the account agreement (even though I called them on it before ever setting up the account, and was given verbal assurance they didn't really mean it, but that's another issue.) It becomes an accounting issue. The broker only tallies up the transactions at the end of the day. As far as their system knows, I don't even own something yet if I try to sell it the day I bought it.

As a practical matter, end of day accounting can be manipulated to your advantage. It does not matter what order you do things. You can in fact start the day fully invested, spend your account equity on new stock and later in the day liquidate everything you held overnight. So during the day you can actually be in position to make gains on stock worth twice your account equity. I never do this, but I could. Of course you had better not lose any money on those overnight positions or you will come up short when the accounting is done. Keeping some unspent equity in reserve protects you from that. In an ordinary cash account (not an IRA where contributions are limited) if you do come up short you have until settlement to send the cash to cover the purchases.

Dan
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