|
Almost correct. Reg. T has an initial margin requirement and so does Rule 2520. There is a difference between buying power and day trading buying power. Buying power comes from Reg. T. Day trading buying power comes from rule 2520. Lets say I'm at the 50% equity point on some stock XYZ. I own $25,000, the broker owns $25,000 and the stock is worth $50,000. My maintenance margin excess is my equity minus 1/4 of the value of the stock. So my maintenance margin excess is $25,000-.25*$50,000=$12,500. My Reg. T buying power is zero, but my day trading buying power is 2*$12,500=$25,000. I can have no open day trading positions that exceed $25,000 or I will get a rule 2520 day trading margin call at the end of the day for the amount I go over $25,000. If I daytrade with a max of $25,000 and make money and close out those positions before the end of the day I will not get a Reg. T or Rule 2520 margin call. If I daytrade and lose money, closing out the positions at a loss, I will get a Reg. T margin call for the amount of the losses, but I will not get a Rule 2520 day trading call. If I don't close out the day trading positions I will get a Reg. T margin call commensurate with the equity I have in the account at the end of the day. I have to at least put up 50% of the money for whatever new is in the account at the end of the day. |
